Bank denies default allegations

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Amid market concerns over a liquidity crunch, Bank of China, one of China's "big four" banks, on Thursday evening denied a media report alleging the bank had defaulted earlier in the day.

The 21st Century Business Herald on Thursday reported through its official Sina Weibo account that BOC had defaulted on Thursday afternoon, deferring transactions for half an hour due to a fund shortage, citing anonymous sources.

In response to the allegation, BOC posted a statement on its official Sina Weibo, saying that it has never had monetary defaults and had timely completed all outbound payments on Thursday.

BOC also said that the rumors are "seriously unfounded" and the bank reserves the right to pursue legal action against those who started the rumors out of malicious intent.

Recent interest rate increases in China's inter-bank market have raised market concerns over a liquidity crunch.

The Shanghai Interbank Offered Rate (SHIBOR) overnight rate surged 578.40 base points to 13.44 percent on Thursday, and fixing Repo 7-day, another gauge of interbank interest, gained 292.9 base points to 11 percent.

However, the central bank issued three-month bank bills worth 2 billion yuan ($324 million) on Tuesday and Thursday, respectively, missing market expectation over large-scale liquidity injection.

The State Council, or China's Cabinet, said at a meeting on Wednesday that the government will maintain a prudent monetary policy with reasonable scale of monetary aggregates.

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