Within 2014 the State Council aims to implement anew deposit insurance system for its banks. While one might think this is meant to lower systemic risk, it’s actually meant as a step to shift risk from te government to its citizens. Handing the people the opportunity to be more responsible for their own financial health, introducing more laissez-faire. I present a translation from a Chinese commentator on this matter, published on March 21, 2014.
The defensive nature of gold in the face of defaults is highlighted. This article concerns depositors, but we should be on the watch for signs that banks themselves are encouraged to hold gold as hedge against financial risks: for this hedge to be effective, the value of gold must rise by a large magnitude to make up for any such systemic losses – if official bailouts are to be avoided. This would mean that a large rise in the price of gold is implied in the policy!
Read that again
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