Experts have said the establishment of the State Council financial stability and development committee is a sign China is aware of the importance of further regulating the country’s financial system.
President Xi Jinxing on July 15 announced the establishment of the committee, which will curb regulatory arbitrage and tackle regulatory loopholes head on. He made the announcement at the 2017 International Monetary Forum held in Beijing on July 15 and 16.
Ding Jianping, deputy director of the Shanghai Institute of International Finance Center, expressed belief that setting up such committee sends a clear message: China is ready to regulate outflow of capital with clear division of responsibilities.
Meanwhile, Xiao Geng, President of Hong Kong Institution of International Finance, said China understood how important the financial stability is to the development of national economy and setting up the committee aims to address the downsides in macroeconomic management and financial regulation.
Iikka Korhonen, head of the Bank of Finland Institute for Economies in Transition noted that the regulation of both individual companies and banks, as well as macro regulation, are needed to take care of the systemic risks before China can establish a stable capital market and finance market, which are necessary for the yuan to become a true international currency.