China's central bank warns of 'Minsky Moment' amid ballooning debt

China's debt could reach $7.6trn by year-end

China's central bank Governor has warned the country's excessive debt and shadow banking could cause a financial crisis, despite Chinese banks being tightly state-controlled.

The People's Bank of China (PBOC) governor Zhou Xiaochuan warned of a possible 'Minsky Moment' in financial markets resulting from excessive optimism, according to Reuters. Speaking on the sidelines of the Communist Party gathering in Beijing, the FT reports him saying: "When there are too many pro-cyclical factors in an economy, cyclical fluctuations will be amplified. "If we are too optimistic when things go smoothly, tensions build up, which could lead to a sharp correction, what we call a 'Minsky Moment'. That is what we should particularly defend against." A Minsky Moment, nam...