‘PBOC to play bigger role in managing financial risk’

- Reuters, EIJING/SHANGHAI

Jul 17, 2017-

China’s central bank will take on a bigger role in macro-prudential management and in averting systemic risk in the financial system, President Xi Jinping said at a once-in-five-years government work conference that ended on Saturday.

Financial security is a vital part of national security, Xi said at the fifth National Financial Work Conference, adding that China will strengthen the Communist Party’s leadership in the financial sector.

A Financial Stability and Development Committee will also be set up under the State Council, or cabinet, state media cited Xi as saying.

No details were given on the committee and on how the role of the People’s Bank of China (PBOC) will be strengthened.

Regulators oversee different parts of China’s complex financial sector, and no singular regulator has a complete picture of capital movements in the system.

That complicates the job of authorities to catch market manipulators who secretly divert funds to risky financial products as they chase higher returns.

Authorities also worry about “giant crocodiles”, a term regulators have started using to describe law-breaking tycoons who circumvent regulations to grab control of other companies.

Earlier this year, the China Insurance Regulatory Commission (CIRC) banned the chairman of Foresea Life from the insurance business for 10 years, citing violations of rules in the firm’s use of insurance funds.

CIRC separately also restricted Evergrande Life’s stock trading activities for one year, after accusing the insurance firm of engaging in irregular investment activities.

Xi also said China will push forward with deleveraging in its economy, and that lowering debt ratios among state-owned enterprises is the most pressing issue.

Beijing will also strictly control new local government debt and strengthen oversight of internet financing, he said.

Finance is the “blood and pulse” of the economy, and it is the sector’s “divine vocation” to serve the real economy, the official Xinhua News Agency quoted Xi as saying.

Published: 17-07-2017 08:58

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