PBOC urges stronger co-operation to curb risks

Mainland regulators must strengthen policy co-ordination to ward off potential financial risks, some of which stem from overcapacity and debt problems in some sectors, said Hu Xiaolian, the central bank's vice-governor.

Hu's remarks followed the recent establishment of a supervisory mechanism under which the central bank plays a leading role in co-ordinating policies.

"Overcapacity and excessively high debt levels in some sectors will create hidden dangers for potential financial risks," she said. "We need to strengthen policy co-ordination, strengthen systemic [risk] monitoring and macro-prudential regulatory requirements, only in this way can we firmly safeguard the bottom line in preventing financial risks."

Concerted efforts were needed to rein in risks in the banking sector, including credit and money markets, as well as capital and insurance markets, she said.

The mainland's changed economic landscape - slower growth, reforms of interest rates and currency regimes, and increased financial innovation - all reinforced the case for joint supervision, Hu said.

She conceded the current system had some flaws, such as overlapping regulations.