The People’s Bank of China (PBOC) introduced new measures on Wednesday aimed at promoting fintech development in the eastern hub of Shanghai and the surrounding Yangtze River Delta region.
Why it matters: Efforts to support the development of fintech and strengthen industry standards align with the country’s three-year plan released in August.
- The government considers fintech the “new engine,” crucial for the country’s financial sector to become internationally competitive.
Details: The PBOC’s Shanghai Head Office issued 40 new measures to shore up fintech development, while the central bank also announced on Tuesday a new nationwide system to certify 11 categories of fintech software and hardware products related to digital payments.
- The new measures for the Shanghai region aim to serve eight primary goals, including building a globally influential fintech ecosystem, deepening fintech applications, and ramping up research and development (R & D). They also aim to further optimize financial services and to strengthen cooperation in fintech in the Yangtze River Delta region, while reinforcing risk management and security and cultivating talent.
- For example, financial institutions are encouraged to adopt innovative technologies, including cloud computing, blockchain, artificial intelligence, and biometric technologies, and to improve in areas like customer service, risk management, and investment consulting.
- Another measure encourages information sharing between various organizations in fintech including government agencies, online platforms, and large companies, for the benefit of the credit rating system to support fintech financing.
- On Tuesday, the PBOC, alongside the State Administration for Market Regulation (SAMR), rolled out a certification system for 11 fintech products relating to digital payments including point of sale terminals, cloud computing platforms, and software applications. The company and products are to be evaluated by regulators for quality and safety, and issued certification good for three years, according to the bank.
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Context: Shanghai, China’s financial center, is making a name for itself as a global fintech hub.
- According to a recent survey, four of the top five cities for fostering a fintech sector are Chinese. Shanghai and Beijing were ranked as the top two locations.
- While a proponent of fintech, the Chinese central bank itself has been working on a new digital currency electronic payment (DC/EP) system, which, if successfully launched, could potentially replace physical money.