Big Data and Digitised Regulation Is Reducing Financial Risk Pressure: China’s Forex Authority

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A senior official from the State Administration of Foreign Exchange (SAFE) has highlighted the ability of new data-based regtech methods to reduce risk in the Chinese financial system.

SAFE deputy head Lu Lei (陆磊) said that the use of big data and other forms of regtech is improving the timeliness and predictive capability of Chinese financial regulation.

“Traditional financial risk monitoring has generally been dependent upon the submission of data by legal persons, and lags are unavoidable,” said Lu on 25 September at the “Fintech Forum” of the 2021 Zhongguancun Forum.

“The use of regtech or digitised regulation can offset this inadequacy to a significant extent. By using certain new technologies, such as high-frequency trading data and macro-indicators, we can preemptively recognise risk points such as financial markets facing pressure, the likelihood of monetary issuance crises as well as large-scale inflows and outflows of capital.

“This helps regulatory authorities engage in pre-emptive assessments of systemic risk trigger mechanisms, leaving ample time for targeted prevention of related risk.

“According to our current forecasts of fintech development rends, because of the targeted usage of data by the financial sector, pressure for the prevention and control of overall risk is on the decline.”

Lu said that interconnections between financial infrastructure and high-efficiency usage will be critical for the development of regtech in future.

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