China's banks need to boost capital buffers: IMF

Shanghai

CHINA'S banks should increase their capital buffers to protect against any sudden economic downturn following a credit boom, the International Monetary Fund said.

In its first comprehensive assessment of China's financial system since 2011, the IMF recommended "a gradual and targeted increase in bank capital". In a worst-case scenario, IMF stress tests suggested the country's lenders would face a capital shortfall equivalent to 2.5 per cent of China's gross domestic product - about US$280 billion in 2016 - together with ballooning soured loans.