The new financial stability and development committee within the State Council aims to
- lead financial reform and regulation
- coordinate between monetary, fiscal and industrial policies
- enhance the authority and effectiveness of regulatory coordination
The committee's responsibilities were outlined by Lu Lei 陆磊 People's Bank of China (PBoC) financial stability bureau chief, in an interview with People's Daily.
First announced at the National Financial Work Conference, the setup of the committee is a crucial step to enhance regulatory coordination and amend regulatory shortfalls so as to control financial risks systematically, says Lu. He goes on to acknowledge
- multiple risks are growing in severity
- these include risks associated with nonperforming assets, liquidity, shadown banking, real estate bubbles, governmental debts, internet finance and exogenous shocks
- financial market integrity is jeopardised by misconduct
- these include circumvention of regulations, interest tunnelling; and cases have been growing in magnitude
- lack of regulatory coordination, insufficient regulation and weak law enforcement lags behind cross-industry financial innovation
The general office for the committee is set at PBoC, highlighting PBoC's leadership in this latest effort to enhance financial regulatory coordination. This is in line with the current structure where PBoC is responsible for macro prudential management and systemic risk prevention.
In its new role, says Lu, the PBoC will emphasise
- sound monetary policy that aims to balance stabilising growth and adjusting structure
- better risk prevention and pre-emptive measures
- fixing regulatory shortfalls
- enhancing regulation over important financial institutions and financial holding groups
- unifying standards for regulation over the business of the same nature
- more comprehensive provisions for corporate governance, shareholder structure and internal risk control