Pre­vent­ing sys­tem­atic risks

ChinAfrica - - Business -

Since the First Na­tional Fi­nan­cial Work Con­fer­ence was held in 1997, China’s fi­nan­cial reg­u­la­tory and su­per­vis­ing mech­a­nism has greatly im­proved. The Peo­ple’s Bank of China, the na­tion’s cen­tral bank, China Bank­ing Reg­u­la­tory Com­mis­sion, China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion and China In­surance Reg­u­la­tory Com­mis­sion have been work­ing side by side and play­ing their re­spec­tive due role in reg­u­lat­ing the fi­nan­cial mar­ket and guard­ing against risks in the sec­tor. How­ever, as fi­nan­cial in­sti­tu­tions ex­pand their busi­ness to an un­prece­dented level of com­plex­ity, chances are that trans-sec­tor fi­nan­cial tur­moil will break out. The cur­rent reg­u­la­tory mech­a­nism faces prob­lems of in­ef­fi­ciency and high-cost com­mu­ni­ca­tion. It may not be able to timely re­spond to com­plex emer­gen­cies.

There­fore, while main­tain­ing the cur­rent mech­a­nism, the meet­ing de­cided to set up a com­mit­tee un­der the State Coun­cil to over­see fi­nan­cial sta­bil­ity and devel­op­ment to bet­ter re­spond to new sce­nar­ios. Mean­while, the cen­tral bank will play a greater role in reg­u­lat­ing fi­nan­cial mar­kets as its func­tions of over­all su­per­vi­sion and risks preven­tion were strength­ened, in line with the pre­vail­ing prac­tice of high­light­ing cen­tral banks’ over­see­ing role in the United States and European na­tions.

Go­ing for­ward, the pre­mier of China will act as the head of a newly-es­tab­lished com­mit­tee co­or­di­nat­ing the three ex­ist­ing reg­u­la­tory bod­ies. The com­mit­tee’s du­ties and rules of pro­ce­dures will also be clar­i­fied to en­sure its ef­fi­ciency and ac­count­abil­ity. Such a re­formed and higher-level reg­u­la­tory com­mit­tee is ex­pected to deal with is­sues re­lat­ing with ex­cess liq­uid­ity, de­faults and mal­prac­tices, and guard against sys­tem­atic risks that would threaten the en­tire econ­omy and so­cial sta­bil­ity.

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