The former head of the Chinese central bank says that authorities will need to adopt regtech measures in order to match the rapid evolution of the fintech sector, while pointing to the need to stymie the emergence of speculative investment.
Zhou Xiaochuan, ex-governor of the People’s Bank of China, said that tech developers, including commercial financial institutions, could see the emergence of distorted behaviour during the process of fintech development, leading to “phenomena which are inimical to society, and potentially an excessive preference for short-term speculation.”
“For this reason regulation is required, and regulation must actively evolve,” said Zhou at the 9th Caixin Summit on 18 November.
“In future the burden on regulation will become increasingly heavy, and for this reason regulators will also need to depend more on information technology.”
In addition to highlighting the need for regtech in China, Zhou said that the regulators themselves must engage in significant knowledge and human resource overhauls in order to keep pace with fintech developments.
“During the growth of fintech, regulators must prevent the emergence of phenomena which puts excessive pressure on the flourishing of emerging technologies,” said Zhou.
“At the same time, they cannot leave their hands too loose, and cannot wait for negative consequences to arrive before engaging in regulation, as price of this for all of society is quite high.
“Achieving the best balance isn’t easy, and regulation requires a sizeable increase in upgraded information structures, as well as a significant upgrade in human personnel.”