A senior Chinese official from the local banking regulator spoke about the crucial role of financial regulation in the mainland, including the reduction of «too-big-to-fail» risks.
Xiao Yuanqi, chief risk officer of the China Banking and Insurance Regulatory Commission (CBIRC) defended the role of regulation while underlining risks in innovation, including impact to fair competition and future innovation.
According to Xiao, regulation played the crucial role of reducing the moral hazards linked to the creation of entities considered «too big to fail» as well as maintaining financial stability.
Innovation vs Regulation
Xiao’s comments follow Jack Ma's criticism against mainland regulators for stifling innovation and the call for reform to fuel growth – a move that reportedly led Chinese president Xi Jinping to personally make a call to halt the highly anticipated Ant IPO.
«History tells us that before each major financial crisis […] markets were irrationally exuberant,» according to a «Reuters» report citing Xiao.
«Regulation is meant to return this exuberance to rationality, and resolutely does not support continuing to push exuberance toward crazy so-called innovation.»
