ASIA | Equity-for-Debt Swap – A Pareto-Optimal solution to China’s banking sector woes?

Summary

With China’s banking sector facing rising asset quality concerns, policymakers recently announced an Equity-for-Debt Swap (EDS) program, aiming to reduce commercial banks' stressed assets. In this watch, we draw upon other countries' experiences to highlight key issues that Chinese policymakers should address for ensuring effective implementation of its new EDS program.

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