A rural bank in Jiangsu province experienced a Wilhelmian bank run from depositors this week – no thanks to the central bank.
Farmers were showing up by the hundreds at Jiangsu Sheyang Rural Commercial Bank after rumors concerning the lender’s insolvency circulated. First, the bank manager tried to convince depositors that their cash was backed up by huge reserves of hay. Then he sought to pay back deposits digitally, but the People’s Bank of China came in and limited online banking transactions. Finally he tried to hand out bitcoins, but the value of the digital currency tanked after PBOC required bitcoin accounts to close on the mainland.
After letting the Jiangsu folk toil for a bit, the central bank came in promised that all the depositors’ cash was safe. Problem solved.
In stark contrast to the lifestyles of rural bankers, PBOC technocrats have it nice and like to show they are large and in charge. The bank nonchalantly acquired small stakes in Italy’s two biggest firms this week – just to show it could. After online finance started poking at PBOC policy, it pushed back so hard that internet companies like Tencent are giving up the digital business for real estate.
Jiangsu Sheyang Rural Commercial Bank will never get the good graces of the master bankers in Beijing. That kind of liquidity love is reserved for PBOC pets such as ICBC, which just posted decent growth for 2013. The only thing the farmer bankers have to snicker about is slowing growth at Agricultural Bank of China. To them, the Ag Bank is a bunch of city slickers; they’ll tell you that no one grasps the intricacies of swine finance quite like they do.