China announces new financial regulator in governmental overhaul

China has announced plans for a governmental overhaul that includes the introduction of a new national financial regulator. On Tuesday, March 7, the government announced that it would abolish the China Banking and Insurance Regulatory Commission (CBIRC) and move its responsibilities to a brand new administration. This move is part of a broader reform agenda for party and state institutions in China that was called for by the country's president, Xi Jinping.

The new financial regulator will "strengthen institutional supervision, supervision of behaviors and supervision of functions," according to the plan. It will take over some functions of the central bank and securities regulator. The legislature is set to vote on the plan for institutional reform on Friday, March 10.

Currently, China's financial industry is under the supervision of the People's Bank of China (PBOC), the CBIRC, and the China Securities Regulatory Commission. There was no specific mention of reforms for the crypto industry in the announcement.

However, in February, an ex-adviser to the PBOC called upon regulators in Beijing to reconsider their harsh ban on crypto. In 2021, China banned nearly all crypto transactions, but the government has been spending millions developing its own central bank digital currency (CBDC), the digital yuan.

One of the most recent updates on the digital yuan project was the incorporation of new smart contract functionality and new use cases, including buying securities and offline payments. China also announced the establishment of the National Blockchain Technology Innovation Center in February, a state-supported institution that aims to speed up the country's industry via blockchain technology.

The new regulatory framework is expected to improve oversight and streamline the financial sector in China. The consolidation of regulatory responsibilities into a single agency could also lead to greater efficiency and better coordination in regulating financial activities.

Overall, China's governmental overhaul and the introduction of a new financial regulator signal the country's commitment to strengthening its financial system and ensuring financial stability in the future.