China will merge its banking and insurance regulators and transfer some of their roles to the country’s central bank People Bank of China (PBOC), according to a parliament document released today during the annual session of the National People’s Congress.
Functions such as drafting key regulations and prudential oversight will be transferred to the PBOC, according to the document.
The China Banking Regulatory Commission and the China Insurance Regulatory Commission have oversight of US$43 trillion in financial assets, according to a report by Bloomberg.
While China is seen as having made considerable progress in decelerating the growth of financial leverage in the economy in 2017, the country will continue to have financial system risk containment as a key priority, said Moody's Investors Service recently.
This merger of the two regulators is seen as a long-awaited move to streamline and tighten oversight of the increasingly huge and complex financial system of the world’s second largest economy whose financial assets, according to IMF,are close to 470% of its GDP.
The merged regulatory agency will be central to President Xi Jinping’s initiative to curb financial risk, which culminated in the unprecedented government takeover of private insurance firm Anbang in February.
The insurance firm jacked up its sales by selling high-yield, short-term products in the past several years and fund its shopping spree in listed firms and overseas assets.