(Economic Observation) What does it mean that all financial activities are included in financial supervision?

  China News Service, Beijing, March 16 (Reporter Xia Bin) The ninth meeting of the Central Finance and Economics Committee was held recently. One of the major topics was the healthy development of the platform economy.

The meeting clearly mentioned that it is necessary to improve the supervisory capacity and level, optimize the supervisory framework, realize the entire chain of supervision before and after the fact, enrich the anti-monopoly supervisory power, strengthen the authority of supervision, and all financial activities should be included in financial supervision.

  In the face of potential risks under the rapid development of financial technology, the government has frequently released signals in the past few months: the relationship between financial development, financial stability and financial security must be handled well.

  In recent years, the speed of China's financial innovation has increased simultaneously with the level of science and technology. The innovative application of information technology has always been accompanied by the financial reform and development process. This has expanded the coverage of financial services, improved the efficiency of financial services, and made certain contributions to lowering the threshold of financing. The application field is already at the international leading level.

  However, it should also be noted that the rapid development of financial digitization has brought about new problems in network security, market monopoly, unclear data ownership, and consumer rights protection, as well as some "pseudo-innovations" and even violations of laws and regulations, affecting market fairness. And financial stability.

  In particular, some large technology companies have entered the field of financial services, formed large financial technology companies, and built a "digital empire" belonging to the company.

  Xiao Gang, a member of the National Committee of the Chinese People’s Political Consultative Conference and former chairman of the China Securities Regulatory Commission, pointed out that the downside of the “digital empire” is that mixed operations may create systemic financial risks; financial consumers and investors are still not fully protected, and it is difficult to defend their rights; they may form an industry. Factual monopoly has brought many challenges to the anti-monopoly of regulatory authorities; there may be technical security risks; decentralization has increased the difficulty of supervision.

  On October 31, 2020, the State Council Financial Stability and Development Committee held a special meeting and stated that it is necessary to encourage innovation and promote entrepreneurship, but also to strengthen supervision and comprehensively incorporate financial activities into supervision in accordance with the law to effectively prevent risks.

  Subsequently, Liu Fushou, the chief lawyer of the China Banking and Insurance Regulatory Commission, said when attending a briefing that all financial activities should be included in a unified scope of supervision in accordance with the financial nature of financial technology.

  Shang Fulin, member of the Standing Committee of the National Committee of the Chinese People's Political Consultative Conference and director of the Economic Committee, previously told China News Agency and other media that financial technology is essentially a technology-driven financial innovation activity and should also be regulated and licensed to operate in accordance with laws and regulations.

  Regarding the latest proposal that "financial activities should be fully incorporated into financial supervision", Tian Lihui, Dean of the Institute of Financial Development of Nankai University, told a reporter from China News Agency that this proposal means that financial supervision will achieve full coverage without leaving dead ends. China's technology and financial innovation must firmly grasp the premise of legal compliance.

  "This is not to curb financial innovation, but to regulate financial innovation. What China's finance needs is financial innovation that can help the national economy and the people's livelihood and meet regulatory requirements, rather than circumvent supervision and carry out institutional arbitrage innovation." Tian Lihui said.

  In the face of financial innovation activities, while achieving "no dead ends" in supervision, it is also necessary to allow supervision to keep pace with the times.

  Xiao Gang suggested that for large financial technology companies, supervision should improve the regulatory framework for large financial technology companies, strengthen the protection of financial consumers and investors, strengthen anti-monopoly supervision, establish and improve emergency management mechanisms, and strengthen international regulatory coordination.

  He also specifically mentioned that in the face of various challenges in the development of digital finance, we should vigorously develop regulatory technology to deal with it.

Regulatory technology aims to use technological means to optimize financial regulatory models, improve financial regulatory efficiency, and reduce institutional compliance costs.

However, at present, the development of regulatory technology lags behind the development of financial technology. In the future, overall planning should be strengthened, and the intelligence and penetration of supervision should be improved.

  Shang Fulin bluntly stated that we will severely crack down on "pseudo-innovation" and "chaotic innovation", and "zero tolerance" for various violations of laws and regulations. We must continue to improve the regulatory system to enhance pertinence, applicability and operability.

  Tian Lihui said that Internet companies have outstanding business innovation capabilities, and supervision requires principled supervision to prevent institutional arbitrage through model innovation.

Moreover, in the new era, supervision needs to actively use big data and cloud computing, and carry out intelligent supervision in a timely manner.