Authorities to rein in systemically important financial institutions
28 November, 2018
The People’s Bank of China, China Banking and Insurance Regulatory Commission as well China Securities Regulatory Commission have co-released a guideline to tighten the supervision on systemically important financial institutions which are “too big to fall,” aiming to prevent systemic risks, The Paper reported.
Financial institutions will face more stringent regulations once recognized as systemically important. Not only commercial banks, brokerages and insurance companies, such as the big five state-owned banks, but also Internet financial service providers like Ant Financial are expected to be included.
The PBOC said it will raise additional requirements of the capital and leverage ratio on these financial institutions.
It will also set up a special disposal mechanism, which aims to ensure that when these giants fall, their key financial business and services will not be interrupted.
PBOC, CBIRC and CSRC will conduct risk assessments and stress tests on them regularly, and impose additional regulatory requirements based on the results.
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