China’s Liquidity Paradox
Despite China's swelling foreign-exchange reserves – the result of persistent current-account surpluses – market and interbank short-term interest rates are soaring. How did this happen, and what should policymakers do about it?
BEIJING – Consider this: Despite China’s swelling foreign-exchange reserves – the result of persistent current-account surpluses – market and interbank short-term interest rates are soaring. How did this happen, and what should policymakers do about it?