Springhill Group Korea, Seoul _ BOJ official sees China for facing financial crisis

1
BOJ official sees China "in danger zone" for
facing financial crisis
2

• TOKYO (Reuters) - The combination of a property
  price bubble, demographic changes and rapid loan
  growth heightens the chance a country will face a
  financial crisis, a Bank of Japan deputy governor
  said on Tuesday, warning that China is now
  entering a "danger zone" in this regard.
• Kiyohiko Nishimura, one of the BOJ's two deputy
  governors and a former university professor with
  expertise on data analysis, noted that there were
  similarities between Japan's asset-price bubble
  of the 1990s and the U.S. housing market bubble
  of the 2000s.
• In both cases, when the ratio of working-age
  people to the population peaked at a time of high
  property prices and sharply rising loans, these
  coinciding conditions led to "malign" bubbles
  that spawned a financial crisis, he said.
• "China has not yet peaked with respect to
  working-age population ratio, but it is close,"
  while loans are on the rise and property prices
  showed a clear upsurge through 2010, Nishimura
  told a conference in Sydney hosted by the Reserve
  Bank of Australia and the Bank for International
  Settlements.
• "It is clear that not every bubble-bust episode
  leads to a financial crisis. However, if a
  demographic change, a property price bubble, and
  a steep increase in loans coincide, then a
  financial crisis seems more likely. And China is
  now entering the 'danger zone'," he said,
  according to the text of his speech posted on the
  BOJ's website.
• Nishimura made the remarks at the research
  conference, where policymakers studied asset
  bubbles and discussed how they affect financial
  stability and what tools they had at hand to
  prevent them or minimize the damage to the
  economy once they burst.
• His speech, titled "How to detect and respond to
  property bubbles challenges for policy-makers,"
  analyzed in theoretical context the historical
  trends of asset bubbles.