China to Form 'Super Agency' to Coordinate Financial Regulators

China's government will create a new agency, led by the central bank, in a bid to coordinate financial supervision and bolster regulation in the financial sector.

According to a statement by China's State Council, dated 15 August, the new body will coordinate monetary and financial supervisory policies as well as supervise legislation without changing the roles of the country's incumbent watchdogs.

The move to establish a new body is aimed at bolstering financial stability and strengthen the safeguards against risk. It is also aimed at regulating new financial products.

The new group will also coordinate information sharing between the regulators and coordinate the collation and release of China's financial data.

The body will consist of the heads of the banking, securities, insurance and foreign-exchange regulatory bodies, according to the statement.

The members are the People's Bank of China (PBoC), the China Banking Regulatory Commission (CBRC), the China Securities Regulatory Commission (CSRC), the China Insurance Regulatory Commission (CIRC) and the State Administration of Foreign Exchange (SAFE).

Zhou Xiaochuan, the governor of the PBoC will act as the head of the group, while the CBRC, CSRC, CIRC and SAFE will be represented by Shang Fulin, Xiao Gang, Xiang Junbo and Yi Gang, respectively.

The group will meet on a regular basis but won't replace the authority of the cabinet or the existing industry watchdogs, the statement added. It will report to the cabinet and will not function as a policy maker.

If needed, the new agency can also invite the National Development and Reform Commission (NDRC), China's most powerful economic planner, and the Ministry of Finance to its meetings.

Super-Regulator

Markets have speculated that China would form a super-agency for financial regulation in a bid to overcome administrative hurdles and quicken reforms in the vital sector.

For example, China's bond market has faced conflicts of interest from three different regulators. While the central bank governs bond sales in the inter-bank market, the CSRC oversees bonds issued by listed companies and the NDRC approves bond issuance by non-public firms.

The new body is expected to reduce these conflicts through better coordination of the different watchdogs, despite its inability to frame policies.