BEIJING (Reuters) - China’s new financial stability committee will help to coordinate on financial reform and regulation of markets as well as monetary and industrial policy, a central bank official told the official People’s Daily in an interview published Tuesday.
The committee was set up because financial oversight in China is not coordinated, said Lu Lei, who heads the financial stability department at the People’s Bank of China (PBOC).
There has been a lack of supervision of the market, he said, describing the situation as “full of chaos”.
Chinese President Xi Jinping said over the weekend that China would set up a Financial Stability and Development Committee under the State Council, or cabinet.
Regulators oversee different parts of China’s complex financial sector, and no singular regulator has complete visibility of capital movements in the system.
“Risks in China’s financial market can be controlled, but nonperforming loan risks, liquidity risks, shadown banking risks...property bubble risks (and others) are increasing,” said Lu.
In an attempt to curb China’s addiction to debt and defuse financial risks, authorities have intensified curbs on speculative investments, shadowbanking activity and excessive credit growth over the past year.
PBOC will also take on a bigger role in macro-prudential management and in averting systemic risk in the financial system, Xi said in his comments on the weekend.
No details were given on who could head the committee and on PBOC’s enlarged role.
Reporting by Elias Glenn; Editing by Shri Navaratnam