The Chinese government recently iterated its effort to at least mitigate, if not totally curb, online financial risks. Beijing added that it will also take a closer look and impose new regulations regarding the use of shares as collateral for financing activities in order to maintain the stability of the market.
In order to fast track these regulations, China will focus on the development of long-term regulatory mechanisms that will oversee internet finance. This is according to Financial Stability and Development Commission chairman Vice Premier Liu He who shared the recent development after a cabinet meeting.
Despite the growing anxiety about online financial risks. The chairman said that several regulatory bodies are already on top of the job and that online lending is already under control.
The recent meeting was called following a central government task force was formed and its main task was to crack down on online finance risks. The task force was able to formulate 10 new measures that will serve as guidelines in order to mitigate the risk brought upon by the problematic peer-to-peer lending sector. According to people from the task force, this was implemented in order to protect the social and financial stability of the market.
As part of the ongoing effort of several regulatory bodies, more than 243 online platforms had already been closed since June. This is according to the figures provided by the authorities to the media.
In a statement released on Monday, the Chinese State Council said that it will continue to dig deeper into the capital market in order to create proper regulations. The State Council added that this is important in order to create a capital market that will better serve the real economy.
Among the reforms expected to be imposed will cover regulations that will improve the quality of all listed companies, stock issuance system, and expand the current long-term and stable funding sources tapped by the country's top capital providers.
Since the start of the year, China has been aggressively targeting high-risk lending companies and capital providers. As more and more people are entering the online finance industry, China has deemed it important to formulate regulations that will serve as a guide to this, particularly risky industry.
Since it implemented such regulations, authorities have reported that it had successfully closed hundreds of illegal and unregulated online lending platforms.
