Poor inter-agency coordination was partly blamed for the summer stock market crash, which saw a more than 40% drop between mid-June and August.
Three into one
The three regulatory agencies that may be merged are the China Securities Regulatory Commission (CSRC), the China Banking Regulatory Commission (CBRC) and the China Insurance Regulatory Commission (CIRC), according to a report by Reuters quoting unnamed sources.
The uncoordinated policy response to the stock market crash prompted senior leadership to begin internal discussions about merging the three main financial regulators, according to a senior official at one of the regulators involved in the process.
British model
Beijing is reportedly looking at Britain’s regulatory set-up as a prospective model, among other options, the senior regulator source said.
“It’s quite difficult to differentiate between a securities company versus an insurance company versus an asset management company, yet they are under different regulatory umbrellas and belong to different regulators."
Since the global financial crisis the Bank of England has been given additional control over the financial system, partly in the hope of avoiding future bank failures.
“It’s quite difficult to differentiate between a securities company versus an insurance company versus an asset management company, yet they are under different regulatory umbrellas and belong to different regulators. This leads to a lot of overlap,” said Zhou Hao, economist at Commerzbank in Singapore.
“This is something that follows the more sophisticated and more straightforward regulatory framework, which I think has done quite well in the British system,” he added.
It should be noted, however, that discussions around a single Chinese financial supervisory commission have been ongoing for more than a decade.
