China’s Banking Crisis Escalates, Shockwaves Felt In Global Crypto Markets – Coinpedia Fintech News

China’s Banking Crisis Escalates, Shockwaves Felt In Global Crypto Markets – Coinpedia Fintech News

April 5, 2023

The Chinese banking crisis continues to escalate as authorities launch a probe against Everbright, China‘s state-owned asset management group. Li Xiaopeng, Everbright’s former chairman and party chief, has been accused of violating law and discipline. This latest development comes amid a global banking crisis that shocked the $60 trillion Chinese finance industry.

Related: “China Crypto Pump” Hype: Could it be the Next Big Thing for Cryptocurrencies? – Coinpedia Fintech News

Regulators Attempt to Control Risks and Restore Growth

The central commission for Discipline Inspection and the State Supervision Commission are leading the probe against Everbright and several other financial firms. Policymakers are trying to restore growth and handle economic fallout while attempting to control risks in the banking system.

No Damage to Books, Say Banks

China’s largest banks, including Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of China, reported no direct damage to their books from last month’s emergency rescue of Credit Suisse by UBS and failures in the US banking sector.

Although smaller banks like Baoshang Bank and some rural banks in Henan province have encountered problems that reflect local issues, they do not seem to pose systemic risks to the broader economy, despite unclear structures and operations.

Also Read: Here’s Why US Banking Crisis Is The Best Marketing Campaign For Bitcoin In History – Coinpedia Fintech News

Macro Risks Pose a Worrying Problem

According to Zhu Min, Vice President of the China Center for International Economic Exchanges, the situation has improved after the last three to four years of Chinese regulatory action. However, the collapse of Silicon Valley Bank (SVB) reflects a macro risk. Zhu noted that SVB had adequate capital and liquidity before it collapsed. Macro risks present a much more worrisome problem than local ones.

Growing Concerns for Crypto Markets

There are growing concerns that the ongoing problems in China’s financial sector could have repercussions for the cryptocurrency market. At press time, the total cryptocurrency market cap had increased by 2.2% to $1.21 trillion over the previous twenty-four hours, with Bitcoin (BTC) selling at $28,526 (a 0.9% increase).

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During the same time period, Ethereum (ETH) was the better-performing cryptocurrency, rising above $1,910 for the first time since August of last year, seeing an increase of 4.26%. Likewise, other major cryptocurrencies, like the token of the layer 2 platforms Polygon (MATIC) and the token of the Solana blockchain (SOL), were largely in the green. However, the popular meme coin DOGE dropped 3.5% post a massive surge after Elon Musk changed the Twitter Logo. 

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