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China Plans New Financial Risk Assessment Framework

China's central bank has said it is planning to upgrade its financial risk assessment framework which will be launched next year, in a bid to ward off financial risks.

The capital adequacy ratio, a measure of an institution's ability to cushion loan risks, will be the core of the new system called Macro Prudential Assessment.

Other assets including investment in bonds and equities will also be added to the central bank's checklist for financial institutions, a move to prevent them from transferring their assets to evade credit control.

The MPA will also keep a close eye on irrational interest rate setting to avoid unhealthy competition.

The central bank said in a statement that the assessment "will change its focus from loans to a focus on credit in a broader sense".

According to a key economic meeting held earlier this month, the government has listed the guarding against and defusing of financial risks as one of its major tasks in 2016.

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