China's central bank's top researcher has called for the People's Bank of China (PBOC) to provide greater supervision over the financial system, without advocating for major changes in the country's regulatory architecture, reports Reuters.
“In the current environment of frequent financial chaos, we should strengthen the central bank’s overall role”, rather than have the bank serve in a coordinating role, Mr Xu Zhong, head of PBOC’s research department said in an article published on Sunday by financial magazine Caixin.
The central bank researcher advocated maintaining China’s current regulatory architecture of one central bank and three regulators. But he added that the Financial Stability and Development Committee, established by the State Council last year to address systemic financial risk, should coordinate horizontal policy making, coordination and implementation.
He concluded that a matrix organisational structure was the best approach for the Financial Stability and Development Committee to make changes to the financial regulatory regime, reported the South China Morning Post.
Under the existing “vertical” structure, the committee oversees the PBOC, the China Banking Regulatory Commission, the China Securities Regulatory Commission, the CIRC and the State Administration of Foreign Exchange.
But Mr Xu called for “several professional commissions” to be set up under the committee that would be in charge of a “horizontal” approach to cross-sector information sharing, decision-making, coordination and implementation.
“This type of matrix structure was first used in international corporations such as Goldman Sachs in the 1950s … they are also widely used in multilateral international organisations – for example, the Financial Stability Board,” he said.
A report last month said that a plan to merge the China Banking Regulatory Commission and the CIRC was being drafted.