In 2011, the central bank of China will switch its monetary policy from moderately easy to prudent, returning to the normal situation. In this context, and supposing that the economic and financial reality is coupled with other deflationary policies introduced by the central bank, the corresponding outcome will be a decline in market liquidity and a potential rise in systemic risks in the bond market. Currently, as a major part of the Chinese capital market, the bond market has a wide sphere of influence and significant importance for financial stability

Key Topics Covered:

I. Systemic Risks in the Bond Market Increase with the Expectation of Rising Interest Rates

II. Analysis of the Impact of Systemic Risks in the Bond Market within the Current Cycle of Rising Interest Rates

III. The Policy Outlook

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