China revises central bank law to help risk fight

BEIJING, Oct 23 (Reuters) - China on Friday issued a revised law on the central bank to formalise its expanded role in overseeing the financial sector to help ward off risks in the world’s second-largest economy.

In recent years, the People’s Bank of China (PBOC) has been boosting its policy clout and regulatory reach by adopting macro-prudential and counter-cyclical policy tools, as it seeks to contain risks to the financial system.

The revised law on the PBOC will help “prevent and resolve financial risks and maintain financial stability”, according to the draft law published on the central bank’s website for public comments.

Under the revised law, the PBOC will strengthen its macro-prudential management, coordinate supervision of systemically important financial institutions and financial holding companies.

Rapid changes have taken place in China’s financial sector as financial firms have become more integrated and internet finance has developed rapidly, which could fuel financial risks, the central bank said.

The revised law will continue to ban the central bank from buying government bonds or providing loans to local governments.

Some Chinese economists have been calling for the central bank to buy treasury bonds as part of stimulus policy steps. (Reporting by Kevin Yao; Editing by Alex Richardson)