Tags: asian | banks | tightening

Asian Banks Tighten to Avoid Bubbles

By    |   Monday, 02 Nov 2009 10:58 AM

Central banks across Asia are tightening policy to avoid unsustainable rises in stock, bond, and real estate prices.

They are seeking to avoid a credit bubble, like that in the United States which caused the current financial crisis.

Regulators in South Korea, Hong Kong, and Singapore told banks in recent weeks they need to tighten lending standards, Bloomberg reports. And the central banks in India and South Korea have indicated they are poised to raise interest rates in coming months.

“Asset bubbles are something that authorities have to contend with quickly and not let run away,” Tai Hui, head of Southeast Asian economic research at Standard Chartered, told Bloomberg.

“Central banks are ready to take some of the wind out of the sails whether through interest rates or administrative measures.”

In Hong Kong, home prices have jumped 26 percent this year with mortgage rates at 19-year lows. So regulators have implemented stricter down-payment requirements for luxury homes.

Meanwhile, stocks have jumped 66 percent on the Shanghai exchange and more than 45 percent in Hong Kong, South Korea, Singapore and Taiwan. That compares to a gain of 18 percent for the Standard & Poor’s 500 Index in the United States.

Asian officials are expressing concern in public.

Heng Swee Keat, managing director of the Monetary Authority of Singapore, said at a recent conference, “Conditions are extremely accommodative, and how that will manifest itself is something that will be watched.”

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Central banks across Asia are tightening policy to avoid unsustainable rises in stock, bond, and real estate prices.They are seeking to avoid a credit bubble, like that in the United States which caused the current financial crisis. Regulators in South Korea, Hong Kong, and...
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Monday, 02 Nov 2009 10:58 AM
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