Conference system to link up China's financial watchdogs
State Council approves communication platform to improve supervision of cross-sector issues
The State Council will establish a mechanism that will allow the central bank to co-ordinate financial regulation under different government departments, the central government says on its website.
The new mechanism, which will involve the banking, insurance, securities and foreign exchange sectors, is seen as an important move for the government to improve regulation on cross-sectoral financial policies, products and services.
According to the State Council's announcement yesterday, a joint conference system will be set up for the heads of the People's Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission, China Insurance Regulatory Commission and the State Administration of Foreign Exchange.
Officials from the National Development and Reform Commission and the Ministry of Finance might also be included if necessary, it said.
The system would provide a communication platform for the relevant departments to meet, discuss and co-ordinate issues concerning regulations, currency policies and laws.
The conferences are also expected to help co-ordinate work on cross-sectoral financial products, market innovation, information sharing, regional and systemic financial risk control as well as maintain stability.
"There has been a demand for such a system for a long time," said Lu Zhengwei, the chief economist at Industrial Bank.
Lu said more cross-sectoral financial products and services had emerged in recent years, often involving regulation from more than one official agency.
"Take for example the insurance products sold in banks. Both banks and insurance companies should play a role in supervision. A regular communication channel is necessary to uncover loopholes in the supervision system and figure out solutions in case of serious problems," he said.
Central bank governor Zhou Xiaochuan would be the convenor of the joint conferences.
"[The conference system] will not make any changes to the financial regulation, replace or weaken the duties of relevant departments. It will not make any decisions for the State Council," the announcement said.