Global banking watchdog warns over Chinese banks
Risks of a Chinese banking crisis are mounting, according to a warning indicator from the banking industry's global watchdog. A key gauge of stress in the banking sector is now more than three times above the danger level, the Bank for International Settlements (BIS) said. China's credit-to-GDP gap hit 30.1 in the first quarter of 2016, it said. The BIS considers a credit-to-GDP gap of 10 to be a sign of potential danger. A year ago the BIS quarterly review put the figure for China at 25.4. Karishma Vaswani: Just how bad is China's debt crisis? The BIS calculates the gap by looking at borrowing in relation to the size of the economy, and comparing that with the long-term trend of that ratio. When the two start to diverge, the BIS argues, a banking crisis could be on the way.