The National Administration of Financial Regulation (NAFR) has officially launched as China’s new principal financial services regulator.
The newly formed authority, which sits directly under China’s chief administrative authority the State Council, replaces the China Banking and Insurance Regulatory Commission (CBIRC) and also absorbs certain functions of the People’s Bank of China and the China Securities Regulatory Commission (CSRC).
The NAFR’s opening ‘marks an important step in the country’s institutional reform on financial supervision’, according to an article from state news agency Xinhua posted on the State Council Information Office’s website.
The establishment of the new regulator is ‘expected to strengthen and improve the country’s financial regulation, and tackle some of the long-standing and prominent problems in the financial sector’ according to Xinhua article. The new authority will regulate the whole financial industry, with the exception of the securities sector.
The plan to set up the authority – which is being headed by Li Yunze, a former vice-president at the Industrial and Commercial Bank of China (ICBC) – was adopted by China’s national legislature in March.
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China’s regulatory re-think
“The People’s Bank of China and the China Securities Regulatory Commission have transferred their responsibilities regarding protecting financial consumers and investors to the NAFR,” said Yin Zhentao, a researcher with the Institute of Finance & Banking, affiliated to the Chinese Academy of Social Sciences, in the Xinhua article.
“Such a move aims to strengthen the standardisation of financial behaviours and improve regulatory efficiency, and to substantially reduce the compliance costs and risks caused by different standards,” Yin said.
The news agency Reuters described in March the plan for the NAFR’s creation as a ‘sweeping reform’.
Regulators in the country have spent the past couple of years taking a tougher and more interventionist stance against financial ‘BigTechs’, such as payments and financial technology giant Ant Group, after their rapid rise to prominence.
CBIRC was itself only established five years ago by a merger of the China Banking Regulatory Commission (CBRC) and China Insurance Regulatory Commission (CIRC).
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