China may have just cleared the way for a ‘black swan’ event

Monday, April 20, 2015
By Paul Martin

APR. 20, 2015

Chinese authorities took a huge 100 basis points off the key capital holding requirement for the nation’s banks over the weekend. There are reports today that even more aggressive stimulus is being considered.

In an excellent research note this afternoon, ANZ says the decision by the People’s Bank of China to ease monetary policy risks creating a “black swan” event.

The phrase “black swan”, coined by Nassim Taleb, describes unforeseen but enormously disruptive events in financial markets.

The note from ANZ’s research team says the size and timing of the policy easing “signals that China has entered into an aggressive monetary easing cycle to counter the economic slowdown and the rising deflation risk”.

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