(Yicai Global) Nov. 17 -- The main function of the newly established Financial Stability and Development Committee under China's cabinet is coordination, not regulation, Zhu Min, former vice governor of the People's Bank of China, the country's central bank, said in an exclusive interview with China Newsweek.
The committee is a subordinate of the State Council, China's Cabinet, he said. It has an office within the central bank, but it has no specific functional department or staff, members are all workers from the nation's financial regulators. It is merely a coordinator, Zhu explained, noting that coordinating China's financial regulators is very important in such a complex environment.
Future regulation must focus on functionality, he continued. China's financial industry has developed from a separate operation into an integrated one with more and more holding companies. Many products are cross-linked between banking, securities and insurance, though regulators still oversee these sectors individually, which can be troublesome.
With this in mind, it is important that communication, data sharing and policy consistency be enhanced within regulation work. For example, regardless of whether regulation is separated or integrated, if communication is poor, we cannot perceive what is really happening on the market, or where regulatory loopholes are, Zhu said.
China's financial regulators include the central bank, China Banking Regulatory Commission, China Securities Regulatory Commission, China Insurance Regulatory Commission and the State Administration of Foreign Exchange, among others. The new FSDC was set up on Nov. 8 this year.