China’s banks in urgent need of short-term funds are paying high overnight rates

Banks in China have accelerated their borrowing of short-term funds, with some, reports Bloomberg, having to pay a 50% overnight rate last week.

The Bloomberg report is gated, but in brief:

• fears of a cash crunch still loom
• authorities sought to calm traders after a recent liquidity squeeze
• onshore lenders doubled their issuance of negotiable certificates of deposit (these are a form of debt with maturities from one to 12 months) this week to more than 1 trillion yuan ($137 billion), the largest weekly issuance of such debt on record