China Should Support Fintech While Tightening Rules on New Business Forms, Ex-Regulatory Chief Says

China Should Support Fintech While Tightening Rules on New Business Forms, Ex-Regulatory Chief Says

Xu Wei

Date: Mon, 05/21/2018 - 18:34 /
China Should Support Fintech While Tightening Rules on New Business Forms, Ex-Regulatory Chief Says
China Should Support Fintech While Tightening Rules on New Business Forms, Ex-Regulatory Chief Says

(Yicai Global) May 21 -- Financial fraud can profoundly affect various sectors, presenting serious implications for the security of the Chinese financial market as well as the international reputation of domestic financial institutions, so regulators should support internet finance businesses, while also tightening up supervision of new financial business forms to prevent risks, said Zhou Yanli, former vice-chairman of China Insurance Regulatory Commission (CIRC), at the Tsinghua PBCSF Global Finance Forum.

Organized by Tsinghua University PBC School of Finance (PBCSF), the forum focuses on new thinking, trends, practices, and dynamics of China’s financial reforms, and seeks to address pressing issues.

The authorities should effectively prevent risks associated with online transactions, and properly handle the relationship between development and regulation, he advised. They should give greater prominence to market behavior regulation, seriously investigate illegal activities, severely punish offenders acting against investors’ interests, and shut down scam organizations, so that the regulators can become a truly formidable force with ‘teeth’ for financial criminals.

Systematic regulatory rules need to be established to encourage market development and rigorously prevent illegal financial transactions at the same time, ensuring steady growth of new forms of financial businesses, Zhou added.

Regulators should ratchet up fintech market regulation and divert more resources toward risk identification, prevention and disposal efforts, he pointed out. The key is to address data, algorithms and computing capacity inadequacies among the regulatory authorities. He called on fiscal authorities to increase inputs into big data regulatory platforms, transforming platforms into fully integrated regulatory frameworks. This way, financial regulators will be able to not only monitor and supervise new financial business forms and their routine activities but also scrutinize the funds and capital of certain institutions on a real-time basis, enabling them to discover major capital security-related risks in time.

Leveraging regulatory technology, financial regulators should enforce the rules with high precision, and improve the skills and capability of regulatory officials, enabling them to enhance existing regulation methods through the proficient use of big data, cloud computing, artificial intelligence and blockchain technologies, he added. Fintech application and development have become a worldwide trend today.

This requires financial regulators to release information about regulatory tech development projects more frequently, and establish top-level digital finance and digital society frameworks on the basis of big data and financial security regulation platforms, he said. In this regard, they can learn from the experience of the internet-based social management system in Zhejiang, dubbed ‘Tian Luo Di Wang’ meaning ‘inescapable snare.’ The regulators should respond more proactively to the challenges facing financial regulation and social management brought by New Finance, New Technology and new forms of businesses.

Editor: William Clegg

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Keywords: Financial Fraud, Internet Finance