People’s Bank of China sets up department to improve financial oversight
- New unit will help PBOC to build ‘a two-pillar framework consisting of monetary policy and macro-prudential assessment’, economist says
- Agency will take over some of the duties of the Monetary Policy II Department, which has been disbanded
China’s central bank has set up a department to oversee and eliminate financial risks, as part of its restructuring of departments and personnel.
The People’s Bank of China (PBOC) established the macro-prudential management bureau to draft rules, monitor and handle financial systemic risks, and advise on currency issues including yuan convertibility, according to a statement published by the State Commission Office of Public Sectors Reform.
The new agency will take over some of the duties of the Monetary Policy II Department, which has been disbanded.
The statement reaffirms the central bank’s expanded role in financial oversight and policy coordination, powers it assumed early last year after an overhaul of the financial regulators.
“The PBOC is building a two-pillar framework consisting of monetary policy and macro-prudential assessment, and the new institution is set up to fit that transformation,” said Lu Zhengwei, chief economist at Industrial Bank in Shanghai.
Many aspects of the PBOC’s duties related to the yuan – international payment, regulation of the foreign-exchange market and the counter-cyclical factor in the fixing rate of the currency – are now seen as part of macro-prudential management, Lu said.