China Must Guard Against ‘Minsky Moment,’ PBOC’s Zhou Says

People’s Bank of China (PBOC) Governor Zhou Xiaochuan said the Chinese authorities must focus on preventing a crash in asset prices that could trigger a financial crisis, reiterating a commitment made by President Xi Jinping this week to guard against financial risks that could derail the economy.

Zhou warned that excessive optimism during a period of strong economic growth and asset appreciation could lead to what’s become known as a Minsky Moment, when asset values collapse suddenly as a result of an unsustainable build-up of debt and speculation fueled by credit.