Govt should reveal views on e-finance

Source:caixin.com Published: 2014-4-15 21:08:03

There has been a lot of discussion about the supervision of Internet finance recently.

The progress of the debate is very interesting, and many elements of it will show up in future social and economic discussions.

There are three main points to consider. The first is balancing the relationship between innovation and prudent supervision.

The second is figuring out whether supervision is intended to develop the market or protect vested interests. This is a prominent problem in China because the government is at once the regulator and also a stakeholder through State-owned enterprises.

The third point is that in the Internet era it is hard to confine matters to a few stakeholders; the public will inevitably be participating. This will test the wisdom of society to keep discussions rational and not overly critical.

The economy of a country mainly rises and falls on the capacity of enterprises to innovate, and industries related to the Internet have the most capacity to innovate in China. This means that if the government nips Internet innovation in the bud out of concern for financial stability, the costs will outweigh the benefits.

It would be better for the government to give its views to the public early so that it can keep a dominant role in the policy discussion. In this situation, making the people believe a policy is impartial is a big challenge.

The author is Chen Changhua, head of the China Research Department at Credit Suisse.



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