The People’s Bank of China (PBoC) has announced the official introduction of a secondary loan market to improve monetary policy transmission and strengthen macro adjustment and control in the financial sector, the Wall Street Journal reported. PBoC Governor Zhou Xiaochuan said the new market would also help optimize banks’ credit structure, limit financial risks and help banks meet stricter capital requirements under Basel III rules. Banks have already been trading loans on the interbank market; the PBoC’s announcement on new rules about loan transfers formalized the market and loan transfer procedures. The rules will allow banks to maintain adequate capital reserves by selling loans to other banks and help in making the market play a larger role in pricing loans.
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