July 14, 2015 / 6:43 AM / 2 years ago

China boosts muni bond market with new collateral rules

SHANGHAI, July 14 (Reuters) - China's central bank and the Ministry of Finance have approved banks and local governments to use municipal bonds as collateral for borrowing, they said on Tuesday.

The central bank and the ministry jointly issued new rules on Tuesday, saying that the rules had come into effect at the end of last month.

Reuters reported on May 12 that the authorities were planning to make the change. Economists said the new rules could pump prime the fledgling municipal bond market that the government hopes will help local authorities manage their unwieldy debts. (Reporting by Lu Jianxin and Pete Sweeney; Editing by Simon Cameron-Moore)

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