According to the China Index, an independent think tank and publication, China introduced its new financial regulatory body, the National Administration of Financial Regulation (NAFR), on Thursday.
Institutional reforms have been received by experts as a significant stride for China in bolstering and enhancing financial oversight. The NAFR’s main objective is to comprehensively strengthen institutional regulation, behavioral supervision, functional regulation, penetrating supervision, and continuous regulation.
Li Yunze, the Party secretary of the administration, emphasized that the NAFR would provide robust support and protection for the establishment of China’s new development pattern and the promotion of high-quality development.
During the unveiling ceremony in Beijing, Li stressed the importance of the NAFR fully executing three major tasks: serving the real economy, preventing and controlling financial risks, and deepening financial reforms. The administration aims to bring all financial activities under legal regulation, eliminate regulatory gaps and blind spots, foster regulatory coordination between central and local governments, and steadfastly maintain the bottom line of avoiding systemic financial risks.
Vice-Premier He Lifeng, a member of the Political Bureau of the Communist Party of China Central Committee, attended the ceremony and unveiled the administration’s nameplate.
According to Xinhua News Agency, the newly formed National Administration of Financial Regulation (NAFR) will operate directly under the State Council, China’s Cabinet. It is the result of transforming the former China Banking and Insurance Regulatory Commission, and its establishment aims to strengthen and refine financial regulation in the country, addressing longstanding issues within the financial sector.
The NAFR assumes the responsibility of regulating the financial industry, excluding the securities sector. It will take on certain functions that were previously held by the People’s Bank of China, the central bank, and the China Securities Regulatory Commission.
Zeng Gang, Director of the Shanghai Institution for Finance & Development, explained that the primary objective of the institutional reform in financial supervision is to achieve comprehensive regulation of diverse financial activities. The reform aims to improve the quality and effectiveness of financial regulation, effectively prevent and resolve financial risks, and steadfastly guard against systemic risks.
The establishment of the NAFR enables better coordination between mixed-ownership operations and segmented regulation as part of specific reform measures. It also facilitates behavioral regulation, entity supervision, functional regulation, and prudential regulation, Zeng added.
According to Wang Jiaqiang, a senior researcher at the BOC Research Institute, the National Administration of Financial Regulation (NAFR) will undertake expanded and reinforced functions and responsibilities. These include unified supervision of financial industries beyond securities and ensuring the overall protection of financial consumers’ rights and interests.
Wang emphasized that the reform measures will broaden the scope and effectiveness of financial regulation. They will address persistent issues such as regulatory gaps, overlaps, and arbitrage within the financial sector. Furthermore, the reforms will facilitate the promotion of standardized and unified financial products and services.
He stated that these reforms will assist China in strengthening financial risk management, prevention, and resolution. They will also enable crackdowns on violations of laws and regulations, and improve the quality and effectiveness of financial regulation.
Wang noted that financial regulation has entered a new phase of robust oversight. While the operational development of the banking industry will face stronger regulatory constraints, it can also expect a more stable financial environment.
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