The Chinese central government is considering a merger between the country’s banking and insurance authorities, as part of efforts to tighten and improve the efficiency of financial sector regulation.
Sources speaking to Bloomberg said that the Chinese Communist Party’s central reform group has directed government agencies to draft a plan for combining the China Banking Regulatory Commission and the China Insurance Regulatory Commission under a single head.
The proposed move could significantly streamline China’s efforts to deleverage the economy and combat the growth of the shadow banking sector, given the extensive involvement of lenders and insurance companies in both.
Analysts say the merger of China’s banking and insurance regulators could raise efficiency and reduce opportunities for regulatory arbitrage.
According to the sources the plan will be officially announced after the start of the National People’s Congress on March 5 in the even of its approval.
Other alternative plans reportedly under consideration include the formation of a super-regulator that combines the central bank with the securities authority, and extending the supervisory powers of the People’s Bank of China’s over the banking, insurance and securities regulators.
Reports of a major shake-up in China’s financial regulatory structure follows the establishment of the Financial Stability and Development Committee in 2017, as part of efforts to improve coordination between authorities during the country’s ongoing deleveraging campaign.