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Xi Jinping Urges PBoC To Take More Active In Managing Risk

Chinese President Xi Jinping has asked the country’s central bank to take a more active role in managing risk in the financial system.

Speaking at the National Financial Work Conference, a meeting that is held every five years, Xi stated that financial security was an important part of national security.

A state media report on the conference said that a Financial Stability Development Committee under the State Council will be created but gave no further details on it or its role in relation to the People's Bank of China (PBoC).

Xi emphasized during his speech that the prudent monetary policy announced earlier should be implemented in full and stated that the central bank must take a stronger role in handling macro-prudential policy aspects. He reaffirmed that China would continue towards its goal of curbing debt in its economy, noting that lowering of the debt ratios prevalent in state-owned enterprises was a current priority along with improving governance of crypto currencies.

KCN News

Xi called for greater accountability of financial regulators at the conference, pointing out that they would be in negligence of their duty if they failed to identify risks in the financial system and would be guilty of malfeasance if they failed to take steps to address the risks.

The three main financial regulators are the China Securities Regulatory Commission (CSRC), the China Banking Regulatory Commission, and China Insurance Regulatory Commission (CIRC). The regulators have defined areas of oversight which results in no one agency having a full picture of capital movements in the economy.

A big issue worrying regulators is that of industrialists regularly bypassing regulations to take control of companies. Another issue is of market manipulators who divert funds to risky financial instruments to gain higher returns. Xi has urged regulators to share information between themselves to coordinate their activities.

A source quoted in a Reuters report stated that typically the Work Conference held before the critical congress of the Communist Party was presided over by the Premier. But this year, President Xi chose to be present along with members from the anti-corruption agency and the parliament advisory body.

Analysts are not expecting big changes before the Congress. In a statement Brock Silvers, managing director of Kaiyuan Capital said

China's plans to ameliorate systemic risk, while laudable, are also significantly driven by the desire for an unblemished 19th Party Congress. Regulators have yet to announce detailed steps, and probably won't do so prior to the Congress. In the interim I don't expect major changes, such as the creation of a unified super-regulator

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