The former head of China’s banking authority is calling for the establishment of a Fintech regulatory “sandbox” in the economic powerhouse of the Pearl River Delta.
In a speech delivered at the Everbright Investment Conference in Hong Kong on Thursday, Liu Mingkang, chair of the China Banking Regulatory Commission from 2003 to 2011, highlighted the importance of the Greater Bay Area as an area for pioneering economic reforms which can be emulated by the rest of the country.
The Greater Bay Area refers to a total of 11 major cities in and around the Pearl River Delta region in the south of Guangdong province, including the special administrative regions of Hong Kong and Macau. They jointly comprise one of the primary engines of the Chinese economy due to the strength of its finance and manufacturing sectors.
“The development of the Greater Bay Area is important because it will be used by the whole nation to gain better experience of the continuous opening-up reforms,” said Liu.
“We want to see how the Greater Bay Area applies certain requirements and fundamentals using a market-oriented approach under regulations which will produce success for some companies, and inevitably mean failures for others.”
Given the long-standing track record of Guangdong province for pilot trials of innovative reform policies, Liu considers the Greater Bay Region ideal for the creation of a regulatory sandbox where Fintech products and services developed by Chinese companies can be tested and trialled.
The sandbox would provide Chinese tech companies with a “safe, supervised space” where regulators would give companies greater latitude to test out innovative products and services, helping to reduce development costs as well as time-to-market.
Should the sandbox be sited in Hong Kong, it will also give Chinese Fintech companies the opportunity to test out their products in an overseas market environment situated right on their doorstep.
“The sand box for the Greater Bay Area project could provide good communication too between regulators and market players,” said Liu.
