Well this is odd, the link to Forbes is broken and I can’t find it on their site but another website (marketwatch.com) references it in their report: http://www.marketwatch.com/story/china-halts-transfers-at-citi-other-banks-report-2014-01-26
Zerohedge reports that Forbes got it all wrong and took the story down. The Forbes reporter simply misunderstood the Chinese culture when he came upon the story, after all, this is not the normal ‘three day weekend’ bank holiday. It looks like there is no story here…
This is a good example of why it’s necessary to check sources in a story. That’s not to say that Before It's News and marketwatch.com didn’t, (many other websites also posted it) they did because it did appear in Forbes but by the time I saw it Forbes had taken the story down.
So this is apparently a non-story! Maybe…
So why am I posting this? Why didn’t I just delete it when I found that Forbes took it down? Well, I ran across the story and went to the trouble of copying and pasting it to Windows Live Writer and coming up with a headline for posting it to my blog, it’s interesting, and there is that ‘maybe’ element to it, after all, it is an unusually lengthy holiday down time. Taken with the HSBC story there may just be more here than meets the eye.
Before It's News: China Halts Bank Cash Transfers: Forbes
(Before It's News) Sunday, January 26, 2014 15:59
BeforeIt’sNews: According to this breaking story from Forbes.com, China has halted all bank cash transfers as shared in the story below. WHY would China’s central bank ORDER commercial banks to put an end to cash transfers? Is this the next step in the global currency war? Could this lead to WW3 as is now being argued by some? With America already practically ‘owned’ by China and getting more in debt every year, this can’t be a good thing. Video reports on China’s money problems also below:
Forbes: The People’s Bank of China , the central bank, has just ordered commercial banks to halt cash transfers.
In short, there will be a three-day suspension of domestic renminbi transfers. There will also be a suspension, spanning nine calendar days, of conversions of renminbi to foreign currency.
The specific reason given—“system maintenance” at the central bank—is preposterous. It is not credible that during the highest usage period in the year—the weeklong Lunar New Year holiday beginning January 31—the central bank would schedule an upgrade and shut down cash transfers.
A better explanation is that the country’s banking system is running dry. Yes, there is an increased need for money in the run-up to and during the Lunar New Year holiday, but that is only a small factor. After all, central bank officials knew this spike in demand was coming—it occurs every year at this time—and a core function of central banks is to manage seasonal liquidity fluctuations. Moreover, the holiday has not started yet, and the PBOC, as that institution is known, could have added more liquidity to meet cash needs.
Submitted by Tyler Durden on 01/26/2014 21:35 -0500
Earlier today, Forbes managed to spook readers with a bombastic report that China's commercial banks had been instructed by the PBOC to halt cash transfers - something which would have dire implications on China's banking system ahead of its new year holiday, and send the banking system into a tailspin just as China is desperate to avoid all turbulence ahead of a potential shadow banking default.
Leaving aside the fact that one should typically rely on official PBOC advisories, posted quite clearly on its website (where one finds no mention of this notice), one could simply keep track of interbank liquidity indicators such as repo and SHIBOR, both of which dropped, indicating that liquidity actually improved.
Anyway, here is what really happened, as reported by China Compass. "Forbes columnist Gordon Chang claimed in a much-quoted item today that the Peoples Bank of China had instructed commercial banks to halt cash transfers. Chang's column, entitled “China Halts Bank Transfers,” specifically refers to Citibank's Chinese branches. The report is entirely misleading." Our advice - focus on the real "weakest links" in China's banking system, of which there are many and are backed by facts, not the least of which is the potential upcoming shadow banking default. Ignore groundless rumors and speculation.
More from China Compass:
According to Citibank China Customer Service, the bank is conducting a routine system upgrade over the first few days of the upcoming New Year bank holiday. System maintenance of this sort has occurred several times in the past. The PBOC has not—repeat not—asked Citibank to stop customers from wiring funds. Customers can still log on to their account to put in fund transfer requests at any time. The receiving bank (non-Citibank) will process the funds to be transferred on the next business day, as it always does. Because of the Lunar New Year break, the next business day is Friday Feb. 7. This is no different from the practice of banks throughout the world. Chang's understanding of Chinese culture evidently does not extend to the timing of bank holidays.
January 30, 2014 4PM is the afternoon of the Chinese New Year eve. Nobody will be around by 5PM as the Hong Kong stock exchange has a half-day trading day.
Citibank's customer web site offered the following notice:
1. Due to the system maintenance of People's Bank of China, Domestic RMB Fund Transfer through Citibank (China) Online and Citi Mobile will be delayed during January 30th 2014, 16:00pm to February 2nd 2014, 18:30pm. As to the fund availability at the receiving bank, it depends on the processing requirements and turnaround time of the receiving bank. We apologize for any inconvenience caused.
2. During Spring Festival, Foreign Currency Transfer Transaction through Citibank (China) Online and Citi Mobile will be temporally not available from January 30, 2014 18:00pm to February 7, 2014 09:00am. We apologize for any inconvenience caused.
If you have any enquiries, please reach us via our 24-hour banking hotline at 800-830-1880 or credit card hotline at 400-821-1880. If you are calling from other parts of the world, please reach us at 86-20-38801267 for banking services or 86-21-38969500 for credit card services.
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All that said, China certainly has all too real liquidity (and solvency) problems - none of which have anything to do with a suicidal act by the PBOC - as explained here extensively in the prior weeks and months, captured best by the fact that both China's and HSBC's CDS are both at multi-month highs.