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2017-11-21 — bloomberg.com

When China unveiled plans on Friday to end the implicit guarantees underpinning asset-management products worth trillions of dollars, it should have been a bombshell for the nation's savers.

But for Yolanda Yuan and other individual investors who've piled into AMPs issued by banks, insurers and securities firms, the government's announcement was largely a non-event. The reason: they didn't believe it.

"I don't think any big banks will dare to take the risk of allowing defaults on AMPs, as that will lead to a flood of fund redemptions," said Yuan, a 29-year-old sales manager at a state-run financial company in Shanghai. She has about 100,000 yuan ($15,069) of personal savings in products covered by the new regulations.

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It may ultimately require an AMP blowup for Chinese regulators to convince investors that they're serious about the new rules, which are set to take effect in mid-2019. But a major product failure is risky: In a worst-case scenario, it could spark a destabilizing stampede out of AMPs, which have become a key source of funding for banks and other financial institutions. It's not clear that's a chance Beijing is willing to take, despite last week's rhetoric.

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