China says SVB collapse shows rapid monetary policy shifts

China says SVB collapse shows rapid monetary policy shifts

A senior monetary policy official at the People's Bank of China said on Saturday that the collapse of Silicon Valley Bank SVB showed how rapid monetary policy shifts were having spillover effects, according to state-owned newspaper Shanghai Securities News.

Xuan Changneng, a deputy governor at the People's Bank of China, told the Global Asset Management Forum in Beijing that financial institutions had grown accustomed to running their balance sheets in an environment of low interest rate volatility and lacked sensitivity to short-term and large fluctuations in rates.

The newspaper cited him as saying that the Silicon Valley Bank's balance sheet characteristics made it more sensitive to interest rates changes and ultimately led to risk.

There is still uncertainty as to whether inflation in the major developed economies will fall significantly in the short term, and continuing to maintain relatively high interest rates may have an adverse impact on the steady operations of the banking and financial system, he said.

SVB Financial Group sought protection under Chapter 11 of the U.S. bankruptcy code, days after its former unit, Silicon Valley Bank, was taken over by U.S. regulators.