Bank of China Stops FX Trading with Foreign Banks on Global Concerns

Though the news might be shaken off, the Bank of China is making a move that might roil markets Tuesday.

According to reports, the BOC is halting trade of currency swaps with BNP Paribas (OTCBB: BNPQY) and UBS AG (NYSE: UBS) in China's domestic market.

The WSJ notes China is a minor player in the global funding markets, meaning it won't have a huge overall impact. However, the action signals continued skittishness about European debt concerns and caution from the Chinese banks, which were caught off guard in the 2008 financial meltdown.

The BOC notified BNP and UBS about the action last week, and halted trading swaps on Monday. In 2008, some Chinese banks halted trading foreign-exchange (FX) swaps with foreign banks on concerns over the banks' credit risks.

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