3rd December 2023 – (Beijing) In a bid to strengthen its oversight of the financial sector, the National Financial Regulatory Administration (NFRA) of China has announced its plans to expedite the reform of small and midsize financial institutions. Director Li Yunze revealed in an interview with state media Xinhua that the NFRA will collaborate with the General Administration of Financial Supervision to tighten supervision of the financial industry, excluding the securities market.
As the watchdog responsible for overseeing China’s vast $57 trillion financial sector, the NFRA, in conjunction with other departments, will prioritize addressing the “key people” and “key behaviours” that pose significant financial risks and undermine market order. This includes cracking down on illegal third-party intermediaries.
Director Li emphasized that the NFRA will seize the current favourable conditions to enhance risk disposal measures. One of the key strategies will involve promoting optimization in the structure, quality, and efficiency of small and midsize banking institutions. Additionally, efforts will be made to encourage insurance companies to focus on their core function of providing protection. The NFRA also aims to guide asset management, non-banking, and other institutions to adhere to their designated roles.
Li expressed confidence in the overall stability of China’s financial sector, highlighting its strong resilience against risks. He stated, “We are fully confident and have the conditions and ability to increase vitality through reform, solve problems through development, and effectively respond to the challenges of various types of financial risks by increasing the volume of inventory.”
The NFRA’s proactive approach to reforming small and midsize financial institutions reflects China’s commitment to maintaining a robust and well-regulated financial sector. By addressing key risks and promoting efficiency, the government aims to ensure the stability and growth of the industry. As these reforms unfold, their impact on the broader financial landscape will be closely watched by market participants and observers alike.