China's newly announced cabinet committee on financial stability and development will mainly be responsible for the coordination of the country's financial reform, development and regulation, according to a senior central bank official.
To make regulation more effective, the new regulatory body will work to ensure coherence between China's monetary, fiscal and industrial policies, Lu Lei, head of the financial stability bureau of the People's Bank of China (PBOC) told the People's Daily, a leading newspaper in China.
China announced that it will set up a committee under the State Council to oversee financial stability and development during a two-day National Financial Work Conference that ended Saturday.
China's systemic financial risks are generally under control, but risks such as bad assets and liquidity issues are still alarming, and regulation has become uncoordinated, inadequate and outdated in the face of innovation and development of cross-market financial products, Lu said.
The new committee will target weak links in supervision and guard against systemic risks to ensure the sound development of China's financial system and help it better serve the real economy, he said.
Specifically, the committee will improve regulatory methods such as risk monitoring and early warning mechanisms, coordinate risk prevention work, deepen financial reform and opening-up, and correct the structural and systemic issues in the sector, he said.
The weekend's conference highlighted three tasks in the financial field, including making the financial sector better serve the real economy, containing financial risk and deepening financial reforms.
The conference, which has been held every five years since 1997 and is widely considered to set the tone for financial reforms, also stressed that the central bank will play a stronger role in macro prudential management and guarding against systemic risks.
Echoing the message from the conference, Lu said the central bank will maintain a prudent monetary policy and shore up weak links in supervision to eliminate financial risk at an early stage.
The PBOC will also enhance coordination and connectivity between financial infrastructure and promote the opening-up of the financial sector, especially financial innovation under the Belt and Road Initiative, he said.