Call for online finance crackdown

By Li Qiaoyi and Chen Yang Source:Global Times Published: 2014-3-4 0:03:01

Photo: IC

Editor's Note

Average Chinese investors are showing increasing interest in online monetary fund products such as Yu'ebao, which was jointly launched in June 2013 by e-commerce firm Alibaba Group and Beijing-based Tianhong Asset Management Group. But for many industry insiders, who have gathered in Beijing to attend the Second Session of the 12th National Committee of the Chinese People's Political Consultative Conference (CPPCC), there is an urgent need for new regulations and stricter supervision of the increasing number of online financial products, in order to avoid a buildup of risks for the many investors joining the new Internet finance wave.



Mei Xingbao, a CPPCC National Committee member and outside supervisor for Bank of China

China should encourage financial innovations such as Internet finance, and keep an eye on their development, Mei told the Global Times on Monday.

Financial authorities should guide the healthy development of Internet finance instead of strengthening regulations to prevent its development. For instance, the entry barriers for Internet finance should be lowered, while punishment should be strengthened for those who violate the rules.

As Internet finance concerns the securities, insurance and banking industries, multi-layer regulation will bring challenges for the emerging industry. The central bank should play a leading role in coordination and work out a [regulatory] mechanism. The authorities should educate investors about the potential risks involved in Internet finance.  



Wu Yan, a CPPCC National Committee member and chairman of People's Insurance Company (Group) of China

Risks associated with the rapid growth of Internet finance should not be neglected, Wu said in a proposal that he plans to submit during the ongoing two sessions, financial information portal aastock.com reported Monday.

The low investment threshold in Internet finance leads to relatively weak risk management by the majority of investors, and this could lead to problems if no effective regulatory framework is put into place, said Wu.

Wu advised taking various measures, including the establishment of guarantee funds for those investing in Internet financial services.



 Yang Kaisheng, a CPPCC National Committee member and former president of Industrial and Commercial Bank of China

The country's Internet finance sector will see faster growth if supervision becomes more standardized, news portal cs.com.cn reported Monday, citing Yang.

Most Internet finance-based transactions are the same as normal financial deals, but their relationship with the existing laws and regulations that govern the financial arena needs to be clarified, according to Yang.

Even if the newly developed business model enjoys a special immunity for the time being, relevant rules and regulations should be created, he noted.

Leaving it to run its course and not intervening until problems emerge would be inadvisable, said Yang.



Cai Esheng, a CPPCC National Committee member and former vice chairman of the China Banking Regulatory Commission

Internet finance in China has gone through various stages of development, such as the emergence of third-party payment and the central bank's issuance of licenses for third-party payment service providers, Cai told reporters on Sunday.

This requires an understanding of the new trend from a development perspective, instead of simply setting products like Yu'ebao against banks, Cai remarked, addressing concerns that the rise of Internet finance is diverting deposits away from banks and into third-party online platforms.

The growth of Yu'ebao is a reflection of the country's move toward interest rate liberalization and is in line with the economy's reform trends at large, Cai noted.

Yan Bingzhu, a CPPCC National Committee member and chairman of Bank of Beijing

There is an urgent need to strengthen supervision of Internet finance, Yan said in a proposal that he plans to submit during the two sessions, information portal aastock.com reported Monday.

The lack of laws and regulations specifically designed for Internet finance could result in the blurring of boundaries between the Internet and finance sectors, making it a potential source of risks, Yan said.

Internet-based financial transactions are not confined by time and place, and counterparties in the deals are uncertain, leading to low transparency and the possibility of systemic risks, Yan noted.



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