China on Tuesday, announced that it would set up a new national financial regulatory body, replacing its banking and insurance watchdog.
This was a part of a government overhaul which includes plans for a national data bureau.
The financial regulation proposal, presented to China’s parliament during its annual meeting, is expected to bring oversight to industry, excluding the securities sector, into an administration directly under the State Council, or cabinet.
Under the new set-up, the China Banking and Insurance Regulatory Commission (CBIRC), will be abolished, with its responsibilities moved to the new administration, along with certain functions of the central bank and securities regulator.
As part of the wider government revamp, staff numbers at central level state institutions will be cut by five per cent.
Winston Ma, an adjunct professor at New York University Law School said; “the overhaul of financial regulation framework reflects the new focus on dual circulation, both domestic and global circulation of the economy and uniform national markets.
“Going forward, different financing markets equity, debt, and insurance, are set to be regulated in a more holistic way, and at the same time financial markets regulation and industry policy making are more integrated than before.”
The legislature will vote on the institutional reform plan on Friday.
China’s financial sector is currently overseen by the People’s Bank of China (PBOC), the CBIRC, and the China Securities Regulatory Commission (CSRC), with the cabinet’s Financial Stability and Development Committee having overall purview.
The new administration will “strengthen institutional supervision, supervision of behaviours and supervision of functions”, according to the plan.
Li Nan, professor of finance at Shanghai Jiaotong University, said under the existing set-up, the CBIRC combined the equivalent functions of the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corp (FDIC) in the U.S., with some regulatory roles held by the central bank.
“Now all of those regulatory functions are with the new bureau, which is basically CBIRC with some regulatory roles taken back from PBOC and CSRC, which makes perfect sense.
“And the PBOC will become more focused on monetary policy afterwards, which resembles what the Fed does.”
Earlier, President Xi Jinping renewed his call for ambitious reforms of party and state institutions.
Xi clinched a precedent-breaking third leadership term during a party congress in October, sealing his status as China’s most powerful ruler since Mao Zedong. (Reuters/NAN)
