Third, although so far the hedge fund sector was relatively unaffected by the recent market turmoil, some uncertainties remain regarding hedge funds’ exposures to credit markets, as well as their leverage and liquidity risk. Finally, outside the euro area, persistently wide global imbalances continue to pose a risk that they will be unwound in a disorderly manner.
In the latter half of 2005 when commercial bank reform yielded preliminary result, the ability and motivation of commercial bank to lend increased remarkably. When financial institutions were better able and more willing to expand the business and foreign exchange continued to flow into China, an important challenge in front of us was to be more proactive in macro-economic management.