Chinese regulation and curbing financial risk

Published 6 March 2018, Kirsten Nelson-de Búrca, legal and regulatory analyst at Corlytics.

 

ARE CHINESE REGULATORS BECOMING MORE OPEN?

In China, there are four main financial regulators: the China Banking Regulatory Commission, the China Securities Regulatory Commission, the China Insurance Regulatory Commission and The National Internet Finance Association.

Given that regulatory data from this jurisdiction is scarcely available, it is best to not dwell on its content, but rather the implications of the information available.

Regulatory tightening has resulted in the establishment of a financial stability and development committee under the State Council. Creating a new committee, whose responsibility is regulation among other tasks, indicates the increasing severity of financial regulation in China.

This information being made available by the government, in English, highlights the potential openness to international exposure to the financial realm in China.

 

UNREGULATED ACTIVITIES BY REGULATED INSTITUTIONS

At present, the Chinese regulatory market is known for its sanctioning of banks. According to Bloomberg, during 2017 the China Banking Regulatory Commission issued a record number of 3,452 penalties totalling $465 million, against banks.

In an attempt to understand Chinese ideals, it is of benefit to refer to the teachings of Confucius (a Chinese teacher, editor, politician, and philosopher who emphasised personal and governmental morality, correctness of social relationships, justice and sincerity).

One quote of his that particularly resonates with me is, “an inconvenience is an unrecognised opportunity”.

FINANCIAL RISKS RISING

In the realm of regtech, regulation is viewed as an opportunity to carve a path and track trends. However, there is always a danger that regulation will not be adhered to.

Regulation does not necessarily remind people of opportunity, but in Mandarin, when the characters of ‘danger’ and ‘opportunity’ are teamed together, this is the sequence of characters that symbolises ‘crisis’.

During a crisis, amidst the danger of disruption, innovators seek opportunity. A decade after the financial crisis, it is evident that innovation has sought to cure for the danger which resides with opportunity.

According to the South China Morning Post, the regulation of new financial technologies ought to consider the ‘nature of the technology as well as issues of financial stability’ in order to cultivate consumer confidence.

 

CURBING GLOBAL FINANCIAL RISK

 As in Australia and Ireland, the best interests of consumers have been promulgated as a priority by financial regulators. As consumer confidence in fintech gains greater attention in China, it is important to emphasise the prominent everyday uses of fintech that already exist there. WeChat Pay and Alipay have taken over from the use of cash. In a cashless society, regulation of fintech and a means to make this form of regulation less fragmented, regtech, become imperative.

It will be interesting to see what 2018 has in store for the regulatory landscape in China.

FINANCIAL RISKS RISING

In the realm of regtech, regulation is viewed as an opportunity to carve a path and track trends. However, there is always a danger that regulation will not be adhered to.

Regulation does not necessarily remind people of opportunity, but in Mandarin, when the characters of “danger” and “opportunity” are teamed together, this is the sequence of characters that symbolises “crisis”.

During a crisis, amidst the danger of disruption, innovators seek opportunity. A decade after the financial crisis, it is evident that innovation has sought to cure for the danger which resides with opportunity.

According to the South China Morning Post, the regulation of new financial technologies ought to consider the ‘nature of the technology as well as issues of financial stability’ in order to cultivate consumer confidence.

 

CURBING GLOBAL FINANCIAL RISK 

As in Australia and Ireland, the best interests of consumers have been promulgated as a priority by financial regulators. As consumer confidence in fintech gains greater attention in China, it is important to emphasise the prominent everyday uses of fintech that already exist there. WeChat Pay and Alipay have taken over from the use of cash. In a cashless society, regulation of fintech and a means to make this form of regulation less fragmented, regtech, become imperative.

It will be interesting to see what 2018 has in store for the regulatory landscape in China.

中国监管机构是否更趋公开化

中国有四个主要金融监管理机构:中国银行业监督管理委员会,中国证券监督管理委员会,中国保险监督管理委员会和中国互联网金融协会。

鉴于中国监管方面的数据很少公布于众,公开信息中透露的潜在信息比数据本身更值得关注。

为进一步加强金融安全,中国新成立了国务院金融稳定发展委员会。这条消息预示着中国正在建立更为严厉的金融风险监管。

 

中国政府用英文发表以上信息表明中国将其金融领域的监管在国际视野中公开化的潜在可能性。 

受监管企业的非监管行为

当今的中国监管市场因银行业遭罚而知名。据彭博社,2017年间,银监会开出了3,452次,总额四亿六千五百万美元的银行罚单。

中国人的理念受孔子思想影响很深 (孔子是一位哲学家和教育家其思想着重个人和政府的道德,伦理,正义和真诚)。

孔子有一句话让我很有感触,大意是困难之中暗藏机会。

 

金融风险上升

在监管科技领域,监管被视为一次机会,可以跟踪发展趋势,创造新的途径。然而,监管法规不被遵循的危险总是存在的。

监管这一英文词汇并不能使人联想到机会。但在汉语里,把危险的”危“和机会的”机“这两个字排在一起就是”危机“一词。

危机时,在崩溃的危险中,革新者寻求机会。经济危机十年后,不少创新已涌现试图铲除这些与机会同在的危险。

据南华早报,对新兴金融科技的监管应考虑到科技本身的性质及金融稳定,这样才能培养消费者信心。

抑制全球金融危机

在澳大利亚和爱尔兰,金融监管部门已宣布消费者的最佳利益是工作重点。在中国,随着金融科技在日常生活中的广泛使用,消费者对金融科技的信心也日益受到关注。微信支付,支付宝已取代了现金。在这样一个日渐无现金的社会,金融科技的监管成为一个迫切任务,而监管科技,因其可帮助减轻监管分散,也变得势在必行。

 

2018年中国金融监管让人拭目以待。

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