China to reduce number of high-risk financial institutions: central bank

The People’s Bank of China (central bank) said on Thursday it will continue to “actively and sustainably” reduce the number of subprime financial institutions in the country.

“Risk elimination mechanisms, as well as monitoring, early warning and evaluation mechanisms, must be strengthened,” the institution said in a statement released after its annual meeting on financial stability.

The Chinese central bank has said it will promote “detection, correction and rapid elimination of financial risks” and called for accelerating the construction of the financial stability guarantee system, through the improvement of the legislation on the matter and guaranteeing the security of deposits.

The central bank will follow guidelines to “stabilize the situation, coordinate and plan in general, differentiate policies and defuse ‘bombs’ with precision.”

The institution’s leaders said that China’s financial system is “generally stable” and that its risks are “manageable”.

While noting the “always good” ratings in risk analyzes of its large banks, among which there are four systemically important ones globally, the central bank acknowledged that there are risks in a “small number of problematic small and medium-sized financial institutions.” ”, although he assured that “important progress” has been made in its reduction or elimination.

On March 3, newly re-elected central bank governor Yi Gang He specified that the number of these small and medium-sized “high-risk” entities was reduced “by half”, currently standing at just over 300.

During the annual session of the National People’s Assembly (highest legislative body), which ended on Monday, a reform to the government structure was approved, which includes the creation of a new regulator, which will replace the entity that until now supervised banks . and insurance companies, with the objective of monitoring the entire financial sector, except the stock markets.