(Yicai Global) Aug. 4 -- The People’s Bank of China proposed for the first time its in-depth participation in global financial governance and effective defense of multilateralism to facilitate the orderly opening of the world’s financial sector.

The central bank announced this groundbreaking proposition among its latest directives for monetary policy, financial supervision and opening-up of the financial sector in a video conference outlining its second-half strategy yesterday.

The PBOC also announced the ongoing application of its previously declared measures for opening the sector. It will promote the full implementation of pre-establishment national treatment and the negative list system, actively and steadily promote yuan internationalization and convertibility of the capital account, and unify the foreign exchange management policies to open the bond market, the bank said in a statement on its website today.

China has sped up its integration into the global financial governance system since instituting economic reforms. It has joined most professional global financial governance institutions, the International Monetary Fund among them, and has extensively complied with or implemented major international rules on global financial governance, such as the Basel III accord.

Basel IIIis a 2009 international regulatory accord that instituted a raft of reforms calculated to ameliorate risk within the global banking sector by mandating that banks preserve suitable leverage levels and hold stated capital reserves.

Seeking a Cure

The coronavirus pandemic has continued its spread since the start of the year. A deep economic recession, high financial risks and low liquidity may ensue. Finding means of maintaining the smooth operation of the financial market during this crisis and promoting the recovery of the world economy are challenges the world faces together for now and will for an indefinite future period.

The pandemic’s ripples have eroded both multilateralism and globalization because a integrated world economy and multipolarity are not in themselves a panacea. Problems will always crop up in development, which will require hard work to solve as soon as possible, said Jin Liqun, president of the Asian Infrastructure Investment Bank.

The central bank did not reiterate for the second half two objectives -- "advancing the founding of a long-term management mechanism for real estate finance" and "continuing to carry out the special rectification program for internet financial risks" -- which it had mentioned at its work conference at the start of the year.

Rather, the PBOC suggested a focus on raising support for capital supplementary bond issues by small and medium-sized banks, actively and steadily advancing the research and development of a legal digital currency, adhering to market principles, respecting commercial banks’ independent management rights, issuing supporting policies without additional strings attached, and the easing of concerns at small and micro businesses.

Editor: Ben Armour