FinanceAsia Magazine

Issue: April 2016

 

China needs an overarching financial regulator to help maintain financial stability as the world’s second-largest economy opens up its capital account to the world. 

Roller-coaster markets, bungled attempts to prop up prices and mixed policy messages illustrate why one is needed urgently. 

A super regulator could be created by merging the country’s three main financial regulators  - for securities markets, banking and insurance - under the control of the central bank. This would provide unified regulation and communicate the rules clearly to market participants. 

A single body would be better positioned to oversee China’s increasingly complex financial institutions, which are branching out and selling products online and offline that fall under the remit of all three current regulators. 

It would also be able to spot systemic problems as they arise, such as the growing leverage of investors across securities and banking products that developed prior to the popping of the stock market bubble last summer.  

Japan’s Financial Services Agency is one example of an integrated regulator overseeing the financial sector. A few other countries empowered one regulator above others in the wake of the 2007 to 2008 global financial crisis to better combat risks to stability. The UK for example has handed more power to the Bank of England.

 The China Securities Regulatory Commission (CSRC), China Banking Regulatory Commission (CBRC) and China Insurance Regulatory Commission (CIRC) have at times appeared to abruptly reverse policy or even be working at odds. 

Regulatory reform is of course an on going process in China as the country’s markets evolve. Indeed the Communist Party’s five-year plan for 2016 to 2020 calls for greater coordination between regulators. However, it seems talk of drastic reform has accelerated since the summer’s stock market rout.  

A giant regulator could create its own version of internecine bureaucratic infighting but its creation would be a valuable chance to streamline policy and update regulations. 

A co-ordinated response and single voice is particularly necessary now given the challenges China faces in rapidly liberalising its financial markets.

 

About FinanceAsia Magazine

Established in 1996, FinanceAsia is the leading publisher of financial news in the Asia-Pacific region. Our combination of print and online products provide the latest news, analysis and insight into Asia’s financial markets.

Published monthly from our office in Hong Kong, FinanceAsia magazine provides our readers with the latest financial trends, interviews, features and investigative reports. The publication has a readership of key decision-makers at corporations, governments, investment and commercial banks, institutional investors, asset managers, brokers, traders and financial intermediaries.

Our regular sections include:

Data Story
We look at the key data behind a topical theme in Asian finance, showcased with an array of graphs and tables.

Greenshoe
A monthly opinion column from the FinanceAsia editorial team. We provide our thoughts on a topic making the headlines.

Deal of the Month
Our regular two-page spread with its signature artwork and in-depth analysis examines the equity, debt or M&A deal that we feel has had the biggest impact on the Asian capital markets that month.

Investor Dialogue
For company CEOs and CFOs, what investors think is a critical concern, and in this column we help them understand just this. Each month we speak to a Chief Investment Officer of a top fund and outline their views on corporate governance, what stocks they like and where they expect to generate the best returns.

Soapbox
A monthly opinion piece from a respected author or commentator on Asian business, finance or economics.

People on the Move
Here we summarise the key hires, fires and moves at the region’s banks, highlighting at least one major move each month.

Deal Tracker
We examine the major primary markets deals of the month and comment on the quality of the debt or equity transaction and the secondary market performance.

The Arts of Finance
A light-hearted look at investment opportunities surrounding the arts business in Asia.

 

Print Edition

FinanceAsia Print Edition