Have China’s Fintech Players Become Systemically Important?

A leading economics expert from Peking University says that some Fintech companies have already become players of systemic importance for the Chinese financial sector.

Speaking at the 2017 Davos Forum Huang Yiping, Vice-head of the China Center for Economic Research, Peking University, pointed out that a number of China’s leading commercial banks and insurance firms had become financial institutions of global systemic importance, requiring the use of different supervisory and regulatory standards.

Huang contends that there are also already online finance companies that are of systemic importance, yet still a lack of new supervisory or regulatory methods to address their highly distinctive form of operation compared to traditional forms of finance.

According to Huang it’s of especial importance that new regulatory concepts and methods be applied to Fintech and online finance, given that they can facilitate a more rapid spread of risk across a broader scale, making any contagion more difficult to control.

Huang pointed to Ant Financial and Yu’e Bao as prime examples of how Fintech poses new challenges to regulators when it comes to the monitoring of markets and transaction, given that these platforms can achieve instantaneous exchange of currency and assets.

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