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Gao, Simin --- "Anti-'grey rhino': prudential regulation and bank resolution in China" [2020] ELECD 221; in Arner, W. Douglas; Wan, Yee Wai; Godwin, Andrew; Shen, Wei; Gibson, Evan (eds), "Research Handbook on Asian Financial Law" (Edward Elgar Publishing, 2020) 274

Book Title: Research Handbook on Asian Financial Law

Editor(s): Arner, W. Douglas; Wan, Yee Wai; Godwin, Andrew; Shen, Wei; Gibson, Evan

Publisher: Edward Elgar Publishing

Section: Chapter 15

Section Title: Anti-‘grey rhino’: prudential regulation and bank resolution in China

Author(s): Gao, Simin

Number of pages: 19

Abstract/Description:

Systemic risk caused by financial distress and bank runs can seriously threaten economic stability. This is most pronounced when the banking system dominates a jurisdiction’s financial system. Michael Wucker created a famous metaphor which is often ignored, ‘the grey rhino’, to describe the obvious risk. In China, this problem is extremely acute with the threat of large problematic or systemic banks being akin to a dangerous ‘grey rhino’. Large bank failures can cause an economic meltdown and systemic risk that, until recently, has been ignored by regulators. Prudential regulation and the resolution of systemic banks, or ‘anti-grey rhino solutions’, have since become central to banking regulation in China. This chapter will discuss the macro- and micro-prudential regulation of banks in China, which aim to mitigate exogenous risk.