China Creates New Financial Regulatory Body
In 1997, China created the National Financial Work Conference. This group meets twice a decade to study ways to improve the nation’s multifaceted financial system, and has historically galvanized the nation’s financial institutions into action, playing a leading role in China’s domestic and foreign fiscal policies. Notably, the National Financial Work Conference has been the stage for: forming agencies to regulate the insurance and securities industries and bank bailout strategies in 1997, creating banking regulators and listing state-owned banks on exchanges abroad in 2002, creating the sovereign wealth fund, establishing the China Investment Corporation in 2007, which currently has assets of $813.5 billion, and developing methodologies for dealing with the global financial crisis of 2008. The conference was held for the fifth time during the weekend of July 14-15, 2017, in Beijing and was again the setting for significant regulatory reform within China.
Out of this recent meeting, Chinese financial reform manifested as a new regulatory institution. In an effort to curb jurisdictional overlaps, the National Financial Stability and Development Committee was formed to streamline the interactions between the three main Chinese regulatory bodies, along with the People’s Bank of China (PBoC). The China Banking Regulatory Commission (CBRC), the China Securities Regulatory Commission (CSRC), and the China Insurance Regulatory Commission (CIRC) will now all fall under the supervision of the new steering committee.
The new decision-making body will elevate the level of financial supervision within China, helping the growing economy to align with goals outlined in China’s 13th Five-Year Plan. Liu Shengjun, director of China’s Financial Reform Institute, recently penned an op-ed in which he described five areas of financial regulatory reform needed to achieve these goals in what the Central Political Bureau of the Communist Party of China called necessary for “national financial security” in April of this year.
These developments are the latest in a string of Chinese reforms aimed at overhauling their financial system and modernizing their economy. This new regulatory body is positioned ideally to make a ruling on cryptocurrencies if and when China decides to act on them. China has been toying with the idea of creating a nationally backed cryptocurrency for over a year now. The ramifications of the most recent meeting of the National Financial Work Conference will continue to attract attention as people try to deduce as much information as possible about the closed door conference.