The People's Bank of China, the country's central bank, has reportedly denied rumors that the cap on interbank debt ratios will be decreased to 25 percent from one-third, Beijing Business Today reported Thursday.
Interbank debt is a debt relationship between financial institutions, which can expand the overall balance sheet, giving institutions the ability to hold more assets.
For many small and medium-sized financial institutions, interbank debt can be leveraged to remove obstacles to setting up more outlets for expansion on scale. Interbank debt also helps with the redistribution of funds among institutions.
