Banking sector contagion

Outcomes below — each % shown is the overall probability of that full chain occurring

• PBOC engineering controlled deleveraging

  PBOC orchestrates shadow bank wind-downs; regional bank recaps funded by central government; credit contraction managed over 18-24 months.

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  Policy lens —PBOC and CBIRC publish a coordinated shadow-banking wind-down calendar with explicit backstop facilities for eligible institutions; Beijing releases a CNY 500B recapitalisation allocation for systemically important regional banks; the Financial Stability Board opens a multilateral peer review of China shadow-banking exposure.

  Trade lens —GLD and TLT bid through the 18-month managed wind-down; HSBC absorbs credit drag; SGD-banking inflow accelerates. · structural · slow

  40%~5% joint→
  Scenario?Authored AI-hypothesis estimate of whether this top-level scenario materialises over the stated horizon. Anchored to historical base rates where applicable. Not a market-calibrated forecast. See /scenarios/methodology.60%×Branch?Conditional probability: GIVEN the parent scenario materialises, the share of that probability mass we estimate falls in this branch. Sums to 100% across siblings. See /scenarios/methodology.30%×Outcome?Conditional probability: GIVEN the parent scenario materialises, the share of that probability mass we estimate falls in this branch. Sums to 100% across siblings. See /scenarios/methodology.40%=Path?Joint probability of this entire path = product of every step. Rounded to nearest 5%; "<5%" shown rather than 0% because rounding to zero overclaims certainty. See /scenarios/methodology.~5%
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• Broad credit crunch hits SMEs

  Shadow bank failures freeze credit; SME bankruptcies surge; unemployment rises 2pp; consumer demand collapses faster than government can respond.

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  Policy lens —The PBOC declares a Financial Stability Emergency and activates unlimited liquidity provision; the State Council orders provincial governments to absorb developer liabilities into local government special-bond programmes; the US Treasury issues a systemic-risk assessment memo and coordinates with G7 finance ministers.

  Trade lens —GLD and UUP rally on global risk-off; LVMUY and iron-ore miners compress 30%+ on Chinese demand shock; KRW and AUD priced into China-export-collapse beta. · structural · slow

  35%~5% joint→
  Scenario?Authored AI-hypothesis estimate of whether this top-level scenario materialises over the stated horizon. Anchored to historical base rates where applicable. Not a market-calibrated forecast. See /scenarios/methodology.60%×Branch?Conditional probability: GIVEN the parent scenario materialises, the share of that probability mass we estimate falls in this branch. Sums to 100% across siblings. See /scenarios/methodology.30%×Outcome?Conditional probability: GIVEN the parent scenario materialises, the share of that probability mass we estimate falls in this branch. Sums to 100% across siblings. See /scenarios/methodology.35%=Path?Joint probability of this entire path = product of every step. Rounded to nearest 5%; "<5%" shown rather than 0% because rounding to zero overclaims certainty. See /scenarios/methodology.~5%
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• Full financial crisis, IMF intervention

  Bank runs spread; yuan under severe pressure; capital controls imposed; PBOC requests IMF stabilization support; global contagion spreads.

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  Policy lens —Beijing formally requests IMF Article XIV consultations and accepts exchange-restriction safeguards; the PBOC implements comprehensive capital controls under State Council authority; G7 leaders convene an emergency summit and activate the Financial Stability Board Global Crisis Protocol.

  Trade lens —GLD to $3,000+ and TLT below 3.5% on flight-to-quality; HSBC repriced existentially; CHF safe-haven flow spikes; HKD-peg under speculative attack. · structural · slow

  25%~5% joint→
  Scenario?Authored AI-hypothesis estimate of whether this top-level scenario materialises over the stated horizon. Anchored to historical base rates where applicable. Not a market-calibrated forecast. See /scenarios/methodology.60%×Branch?Conditional probability: GIVEN the parent scenario materialises, the share of that probability mass we estimate falls in this branch. Sums to 100% across siblings. See /scenarios/methodology.30%×Outcome?Conditional probability: GIVEN the parent scenario materialises, the share of that probability mass we estimate falls in this branch. Sums to 100% across siblings. See /scenarios/methodology.25%=Path?Joint probability of this entire path = product of every step. Rounded to nearest 5%; "<5%" shown rather than 0% because rounding to zero overclaims certainty. See /scenarios/methodology.~5%
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Information cutoff: 2026-05-21 · Authored: AI-generated, council-reviewed · Live signal counts updated hourly