Shadow Banking Crackdown Hit Money Supply Growth, Central Bank Says

The slowing rate at which China’s money supply is increasing will not affect the country’s relatively fast growth, the central bank said, attributing the statistical slow-down partly to the recent crackdown on shadow banking.

The People’s Bank of China (PBOC) on Wednesday released its “Currency Policy Execution Report” for the fourth quarter of 2017, which attempted to explain why the year’s growth of M2, a broad measurement of the money supply that includes cash in circulation and all deposits, slowed to 8.2%, a historic low and a drop of 3.1 percentage points compared to the previous year.