Submitted by Matt Dale of Mao Money, Mao Problems,
Remember, the PBoC had ¥28.6 trillion in assets at the end of June, 2012, but only ¥22 billion in capital. If its assets decrease by ¥22 billion (or -0.07%), it is insolvent. Since peaking out in January, 2012, the PBoC’s balance sheet has lost ¥895 billion, so maybe it already is. Maybe nothing bad will happen. After all, who needs shareholders equity when you can print money?