China should adopt a systemic approach to prevent financial risks amid a lack of coordination among different regulatory agencies, a central bank advisor has said.
"We have rolled out many measures and guidelines to tackle financial risks, but each of them only covers a separate field. We need a broader vision of supervision and should think about how to deal with risks at a macro level," said Professor Huang Yiping, a monetary policy committee member of the People's Bank of China, at a forum over the weekend.
Earlier separate guidelines, either on FinTech or financial products regulations, are not enough to prevent contagion risks as new problems may arise in the future with ever increasing interconnectedness across different sectors and rapid product development, reported China Daily citing Prof Huang.
He said the government needs to adopt systemic approach, which requires regulators to make effective decisions, jointly enhance their capacity to coordinate and improve supervision efficiency. A more systemic approach also requires the regulators to monitor institutions' behaviour, identify and mitigate risks on a timely basis.
China's cabinet-level committee, the Financial Stability and Development Committee, is able to play a key role in coordinating policymaking, he said. The committee was announced last July amid the current drive to reduce risk in the financial sector. No further details of responsibilities shouldered by the committee have been revealed since it held its first meeting last November.
China's financial system is governed by the central bank, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the CIRC.