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China’s Henan bank scandal not just a financial crisis, it may be a lasting political calamity: analysts 
  • China’s central government must find ways to promptly repay the depositors or risk the effects of damaged public confidence, say scholars
  • Depositors’ lost US$6 billion is reminder to authorities that advanced technology alone cannot maintain stability, says academic

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The Henan bank scandal, in which 40 billion yuan (US$6 billion) in deposits disappeared, is more than a Chinese banking crisis – it is a political crisis that could undermine people’s confidence in local governance and also other local banks, according to analysts.

The blow to public confidence in financial stability and the government’s ability to protect their legitimate interests could be a long-term issue, unless the central government can find ways to promptly repay the depositors, they say.

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