China's central bank has unveiled new guidance to improve regulations on financial institutions by evaluating the stability of the overall financial sector to restrict potential systematic risks, which also serves as a major policy to fill the existing regulatory gap.
Following the global financial crisis in 2008, standard-setting bodies such as the Basel Committee for Banking Supervision and Financial Stability Board have issued assessment reports on global major banks and insurance institutions to tackle exposed risks, the People's Bank of China (PBOC) said in a statement released on Tuesday.
The PBOC urged clear guidance on the systematic regulations needed amid rapid development and increased complexity in financial institutions.
It also pledged to set up a special mechanism to ensure timely and appropriate handling of major risks inside major financial institutions. The new policy will cover major banks and securities and insurance companies.
The Banking and Insurance Regulatory Commission and the China Securities Regulatory Commission are responsible for data collection, score calculation and list submission within financial institutions. Authorities will also adopt an information-sharing mechanism to enhance cooperation in implementing the regulations.
