Summary
- The Chinese government announced plans for a governmental overhaul, including the introduction of a new national financial regulator.
- This new administration will replace the current banking and insurance watchdog, as part of an extensive government overhaul.
- China has been investing in its own central bank digital currency (CBDC), the digital yuan, which has recently incorporated new smart contract functionality.
Chinese Government Plans Financial Overhaul
The Chinese government announced plans for a governmental overhaul on Tuesday, March 7. This includes introducing a new national financial regulator, which will replace the current banking and insurance watchdog. The legislature is expected to vote on the plan for institutional reform on Friday, March 10. When in place, this new financial regulator will “strengthen institutional supervision, supervision of behaviors and supervision of functions,” according to the plan.
Current Financial Industry Supervision Structure
Currently, China’s financial industry is under the supervision of three main organizations: The People’s Bank of China (PBOC), the China Banking and Insurance Regulatory Commission (CBIRC) and the China Securities Regulatory Commission. This announcement follows a call from President Xi Jinping to reform party and state institutions in China. A data resource sharing bureau will partly replace some functions of the Office of Central Cyberspace Affairs Commission.
Crypto Ban in 2021 & Digital Yuan Project
In 2021, China banned nearly all crypto transactions yet is heavily investing in its own CBDC – The Digital Yuan project. One recent update on this project includes incorporating new smart contract functionality and use cases such as buying securities or making offline payments. In February 2021 an ex-adviser to the PBOC called upon regulators in Beijing to reconsider its harsh ban on crypto.