Lessons from Yu'ebao row

A heated online debate has started on Yu'ebao, the personal financial product that has been at the center of a public controversy since its launch last June. Some say Yu'ebao is threatening China's economic security. Let's hope the debate leads to improvements in financial service and supervision, says an article in Yangcheng Evening News. Excerpts:

By saving money on Alipay, an online payment escrow service, and transferring it into their Yu'ebao account, customers may not only get higher interest rates than those offered by traditional banks for current deposits, but can also use the money whenever they need. These two attributes have earned Yu'ebao a lot of users across the country.

Yet Yu'ebao has been targeted by critics and opponents, and their reasons for doing so are different. Apart from the potential security risks that Yu'ebao may be exposed to, the imperfect supervision over the current online financial market and its unclear boundary with the traditional finance industry are the reasons why people are criticizing and opposing the personal financial product.

But despite its defects, it is still unfair to call for a ban on Yu'ebao. New products and applications, financial and non-financial, should not be banned until they are proved to be harmful to users.

Actually, we should be thankful for the controversy raised by Yu'ebao, because it has reminded the public to have a clear idea about innovative online financial products. Government watchdogs should use the controversy to take measures to ensure that the innovative aspects of new financial products are for the good of users and are strictly supervised.

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(China Daily 02/28/2014 page9)