China's PBOC Sets Up Bureau to Improve Financial Oversight
(Bloomberg) -- The People’s Bank of China has set up a department to oversee and eliminate financial risks, as part of its restructuring of departments and personnel.
The PBOC established the macro-prudential management bureau to draft rules, monitor and handle financial systemic risks, and to advise on currency issues including yuan convertibility, according to a statement published by the State Commission Office of Public Sectors Reform. The new agency will take over some of the duties of the Monetary Policy II Department, which has been disbanded.
The statement reaffirms the central bank’s expanded role in financial oversight and policy coordination, powers it assumed in early 2018 after an overhaul of the financial regulators.
“The PBOC is building a two-pillar framework consisting of monetary policy and macro-prudential assessment, and the new institution is set up to fit that transformation,” said Lu Zhengwei, chief economist at Industrial Bank Ltd in Shanghai.
Many aspects of the PBOC’s duties related to the yuan -- international payment, regulation of the foreign-exchange market and the counter-cyclical factor in the fixing rate of the currency -- are now seen as part of macro-prudential management, Lu said.
The PBOC conducts quarterly reviews on financial institutions to check liquidity, capital and other regulatory requirements, in a bid to prevent financial systemic risks.
The bank should “construct a coordination mechanism among development plans, fiscal policy” and financial policy, promote economic monitoring and improve policy research, the statement said.
The bank should “construct a coordination mechanism among development plans, fiscal policy” and financial policy, promote economic monitoring and improve policy research, the State Commission Office of Public Sectors Reform statement said.
Among other changes to the PBOC structure and personnel:
- The PBOC, which is also the office of the State Council Financial Stability and Development Commission, will set up a secretariat to assist the office
- The central bank will take the lead in coordinating tasks related to national financial security, a new duty not included in the previous structural plan
- Together with other government departments, it will draft the basic rules for wealth-asset management products, corporate bonds and derivatives
- The PBOC will establish a national financial data base
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