Daily Archive: July 11, 2019

The Role of Debt and China’s Shadow Banking System: Is Baoshang Bank China’s Lehman Brothers?

Modern fractional reserve banking is ultimately a confidence game. If lenders or depositors are confident their bank is solvent, it stands. If confidence is broken, that historically leads to bank panics, deposit runs and domino collapse of a financial system or worse. The surprise collapse in late May of a small Inner-Mongolia Chinese bank, Baoshang, has suddenly focused attention on...