Strengthened supervision to avoid systemic risks and bolster confidence

On Friday, the day after the conclusion of the Central Economic Work Conference, the national work conference for the financial system was held in Beijing. This is the first time that these two conferences have been held back-to-back.

It is essential to coordinate efforts to prevent systemic financial risks and support high-quality economic and social development with high-quality financial services. During the Central Economic Work Conference, when discussing the difficulties and challenges faced by China's economy, three specific areas were mentioned: real estate, local small- and medium-sized financial institutions, and illegal financial activities. These became the focal points of the national work conference for the financial system.

Regarding real estate, the conference proposed fully leveraging the urban real estate financing coordination mechanism to consolidate the market's stabilization, accelerating the establishment of a financial service system that matches the new model of real estate development.

To address the risks of small- and medium-sized financial institutions, multiple measures can be taken to guide improvements in internal governance and boost capital replenishment channels, such as supporting small- and medium-sized banks to supplement capital through special bonds.

Notably, the conference also specifically addressed "external shocks". An official from the monetary policy department of the People's Bank of China stated in an interview that next year will see further deepening of exchange rate market reforms, strengthened management of exchange rate expectations, effective responses to external shocks, which are expected to effectively prevent excessive exchange rate adjustments and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

The conference called for intensified financial regulation across all industries, further improvement of the regulatory system, enhancement of regulatory enforcement and accountability, strengthening of regulatory coordination, rapid filling of gaps in financial legal frameworks, and continuous improvement of regulatory efficiency.

The State Council has issued documents on enhancing supervision of the capital market, insurance industry, and futures market, all highlighting the approach of preventing risks, and bolstering confidence.

-21st Century Business Herald