The world may encounter a second wave of the financial crisis in the mid-term due to rising sour loans as real economies sink into recession, a senior Chinese banker warned in remarks published on Thursday.
Zhu Min, vice president of Bank of China, said in the official China Securities Journal that the current global financial market turbulence would last a while.
“The property market will continue its correction, the share prices of financial institutions will still see big swings, liquidity will remain tight and the foreign exchange market will continue to fluctuate due to reallocation of funds in the world,” he said.
He also warned that some big firms that have already been bailed out by governments might be in trouble again and more financial institutions could face bankruptcy as they have not yet completely written off their losses. “In the next one or two years, more small- and medium-sized banks will go bankrupt, a great deal of hedge funds will close and many insurers will suffer serious losses,” he said.
A top Bank of China official warned the world should brace for “a second round of financial crisis” due to rising bad loans as the real economy falls into recession, in remarks published Thursday.
Efforts by governments around the world to bail out markets have so far failed to solve the deep-rooted problems behind the current crisis, Zhu Min, a vice president for the bank, wrote in the China Securities Journal.