(Yicai Global) Sept. 15 -- China's internet finance sector will enter a rectification and adjustment or even a relatively slower period of development under the recently intensified but necessary regulatory framework, said Huang Yiping, director of Peking University's Institute of Digital Finance at a high-level financial technology dialogue held on Sept. 13.

If supervision is too loose, there could easily be an outbreak of risks that could significantly threaten the industry, he added. However, too much supervision will wipe out many potential opportunities for its development.

Internet finance poses more risks and due to the nature of the sector, these risks can spread quickly. The emergence of online finance has also brought challenges for traditional financial regulation, he said.

Huang believes that internet finance will first impact monetary policy, leading to a series of changes to monetary measures and monetary policy transmission.

Technology is a key source of support for the development of internet finance but the long-tail effect of Big Data analysis may bring monopoly problems, he added. In addition, if Big Data analysis can be applied to financial transactions, this may exacerbate herd effects in the market.

Under the current framework of supervision, most online firms run mixed operations, and some have grown into important institutions. The question of how to supervise these institutions to prevent risks, especially systemic risks, needs careful study going forward, Huang said.

China's financial technology is at the forefront of the world, driven by very high domestic demand for inclusive finance and a relatively tolerant regulatory attitude, providing a relaxed market environment. The sector may encounter uncertainty due to changing regulatory policy, he added.