China allows insurers to use credit derivatives

20 May, 2019 12:00 AM printer

BEIJING: Chinese regulators have allowed insurance companies to use credit derivatives to hedge against risks as part of efforts to encourage insurance funds to serve the real economy.

The purpose of using credit risk mitigation and credit protection tools should be confined to risk hedging, and insurance institutions should not be credit risk bearers, according to a notice by the China Banking and Insurance Regulatory Commission (CBIRC), reports Xinhua.

The notice requires insurance companies participating in the business be capable of using the derivatives to manage risks and to comply with related trading regulations.