PBOC Governor Says China’s Financial Risk “Broadly Contained”

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The head of the Chinese central bank says that risk in the financial sector has been “broadly contained.”

People’s Bank of China governor Yi Gang said that leverage in the Chinese financial sector “has been contained” in statement submitted to the semi-annual meeting of the policy setting committee of the International Monetary Fund held on Saturday.

According to Yi the leverage ratio of China’s non-financial sector posted a slight increase in 2017, while the corporate sector has seen its leverage decline substantially.

“In general, the Chinese economy has solid fundamentals and numerous policy tools available to prevent systemic risks,” said Yi to the International Monetary and Financial Committee meeting.

Yi also said that the central government “has been vigorously pushing forward” reforms of China’s financial regulatory system with the establishment of the State Council’s Financial Stability and Development Committee in 2017.

Yi also provided a general outline of Beijing’s broad ambitions with respect to the Chinese financial regulatory system.

“The general direction for the reform is to strengthen integrated supervision and regulation, separate formulation of regulatory policies and rules from implementation, and at the same time enhance the function of the PBOC in exercising macro prudential regulation and safeguarding against systemic risk.”

Chief amongst these reforms has been the merger of China’s banking and insurance authorities into the China Banking and Insurance Regulatory Commission, and PBOC’s assumption of responsibility for the drafting of key banking and insurance regulations.

In addition to reform of the regulatory system, Yi Gang also stressed Beijing’s commitment to further opening up of the Chinese financial sector, and plans to “significantly relax market access restrictions.”

Yi remarks come just after both the PBOC governor outlined a range of measures for further opening and reform of China’s financial system at the Boao Forum for Asia in April.

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