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"The People’s Bank of China , the central bank, has just ordered commercial banks to halt cash transfers. This notice, for instance, appears on the online portal for Citigroup's Citibank unit for its China customers:"

Important Notice:

1. Due to the system maintenance of People’s Bank of China, Domestic RMB Fund Transfer through Citibank (China) Online and Citi Mobile will be delayed during January 30th 2014, 16:00pm to February 2nd 2014, 18:30pm. As to the fund availability at the receiving bank, it depends on the processing requirements and turnaround time of the receiving bank. We apologize for any inconvenience caused.

2. During Spring Festival, Foreign Currency Transfer Transaction through Citibank (China) Online and Citi Mobile will be temporally not available from January 30, 2014 18:00pm to February 7, 2014 09:00am. We apologize for any inconvenience caused.

If you have any enquiries, please reach us via our 24-hour banking hotline at 800-830-1880 or credit card hotline at 400-821-1880. If you are calling from other parts of the world, please reach us at 86-20-38801267 for banking services or 86-21-38969500 for credit card services.

"The specific reason given—“system maintenance” at the central bank—is preposterous. It is not credible that during the highest usage period in the year—the weeklong Lunar New Year holiday beginning January 31—the central bank would schedule an upgrade and shut down cash transfers."

"A better explanation is that the country’s banking system is running dry. Yes, there is an increased need for money in the run-up to and during the Lunar New Year holiday, but that is only a small factor. After all, central bank officials knew this spike in demand was coming—it occurs every year at this time—and a core function of central banks is to manage seasonal liquidity fluctuations. Moreover, the holiday has not started yet, and the PBOC, as that institution is known, could have added more liquidity to meet cash needs."

http://www.forbes.com/sites/gordonchang/2014/01/26/china-halts-bank-cash-transfers-2/

Related News: " Major default looms in China's huge "shadow banking" system"

Shanghai - A shockwave is looming in China's multi-trillion dollar "shadow banking" system, with an unprecedented default only days away on a $500 million investment product sold to hundreds of people.

Staff at China's biggest bank ICBC pushed the "Credit Equals Gold #1 Trust Product" by promising returns of 10 percent a year, far more than traditional deposits, investors say.

But the coal company it was supposed to fund never obtained key licences for its activities, state media reported, and now the firm that structured it, China Credit Trust, says it may not be able to repay 3.0 billion yuan ($492 million) due on Friday.

The situation is a test case for cleaning up the risky "shadow banking" system in the world's second-largest economy.

http://www.channelnewsasia.com/news/business/major-default-looms-in/968508.html