The People’s Bank of China (PBOC) on Thursday released (in Chinese) a three-year plan with the aim to strengthen support for the fintech sector and curb its risks.
Why it matters: The rapidly expanding fintech sector has been outpacing the central government’s capacity to establish a comprehensive legal and regulatory framework, leading to consumer fraud and the quick rise and fall of the peer-to-peer lending segment.
- The plan will prune the risk-filled sector but boost the use of emerging tech such as blockchain and big data, Yang Wang, senior research fellow at the Fintech Institute of Renmin University of China, told state-run media Global Times.
Details: The “Fintech Development Plan (2019 – 2021)” outlines priorities and development targets for the sector.
- The plan calls for the establishment of “four beams and eight pillars” of fintech development by 2021, guiding principles including increasing user satisfaction of fintech products and services, strengthening financial risk control, and ramping up financial regulatory efficiency.
- The central bank also highlights six priorities: helping the fintech sector reach global competitiveness so it propels the development of the financial sector; tech-based cross-market and cross-industry financial risk control and management improvement; and the development of a basic fintech regulatory framework and rules, monitoring, and assessment.
Context: In July, the PBOC released the first draft rules to regulate financial holding firms, which includes fintech giants Ant Financial, Tencent, and Suning.com. The country’s central bank said that a “regulatory vacuum” around some companies had led to increased risks.
- Last November, Reuters reported that the central bank was testing new regulations on fintech service providers aiming to tackle debt risk.