Local governments around China are establishing their coordinating mechanisms for financial regulation within their respective jurisdictions.
On 17 March Zhejiang province established its own Financial Stability and Development Committee (FSDC) Office Local Coordination Mechanism (金融委办公室地方协调机制) at a meeting convened by the Hangzhou branch of the Chinese central bank.
Over the past month a total of 12 province-level governments around China have established similar mechanisms, with other authorities including:
- Inner Mongolia,
The FSDC Local Coordination Mechanisms are primarily responsible for strengthening the coordination of regulation within their respective jurisdictions and expediting reform and stabilisation of professional duties, as well as providing financial support to efforts to contain the impact of the novel coronavirus over the short-term.
“Local coordination mechanisms can achieve integration to the greatest extent possible, and effectively dovetail central financial regulatory targets with local realities,” said a central bank official to 21st Century Business Herald.
“This means both employing the specialist advantages of central financial regulatory departments, as well as being able to obtain vigorous support from local resources, and relieving the conflicts of interest between departments.”
China announced the launch of the FSDC as a financial authority under the aegis of the State Council in July 2017. The FSDC subsequently established its own office with the Chinese central bank, as part of efforts to improve coordination between central financial authorities.
Dong Ximiao (董希淼), currently a researcher with the National Institution for Finance & Development (国家金融与发展实验室), said that the establishment of the FSDC had primarily resolved problems such as horizontal financial regulatory coordination, and supplementing short-comings in sub-sector regulation.
However, China has yet to establish a vertical financial regulatory coordination mechanism, and this often creates regulatory friction between central and local governments, as well as makes policy implementation more difficult.