A senior official from the Chinese central bank has flagged the normalisation of stricter regulation of the payments sector in future.
“The normalisation of strict regulation should be inevitable,” said Fan Yifei (范一飞), vice-governor of the People’s Bank of China at the 7th China Payments and Clearing Forum held by the Payments and Clearing Association of China on 16 November.
“Normalisation requires that we maintain regulatory focus – in the past it was one way, and in the future it will also be the same way; it’s this way for domestic institutions, and overseas institutions will be treated similarly.
“Strict regulation also requires that we ‘scrape the bone’ and use strong medicine at times when risk appears.
“[We] must resolve existing risk in accordance with established measures, strengthen monitoring of increases in risk, seize problems early on while they’re small, and adopt preventative measures in advance.”
According to data cited by Fan Yifei China’s payments sector has seen over 10% annual growth since 2012, with over 160.8 billion non-cash transactions pressed in 2017, worth nearly 3760 trillion yuan.
PBOC’s branches handled over 11.9 billion transactions worth approximately 3827 trillion yuan, or roughly 46-times full year GDP.
Fan said that problems in relation to the growth of the Chinese payments sector were of three types:
- Commercial banks still lack sufficient understanding of payments operations, and their ability to respond to deep-seated changes in the market remains slow, while they also lack “hazard awareness.”
- Some market actors are still intent upon “pursuing their own path” and hope to dodge the adverse effects of regulation by “luck,” despite China’s ongoing campaign against financial risk that has seen the issuance of a significant number of sizeable fines.
- Some market entities are still providing payments services for illegal activities.
“It is necessary to strictly ban the provision of payments services for drug, pornography, gambling and other illegal activities,” said Fan. “The entire sector must focus on these issues.”