Vital for rules to remain

LEARNING a lesson from the global financial crisis, China will rely more on regulations and enhance its market mechanism, a senior banking regulator said yesterday.

"Regulators should balance between market discipline and government intervention," said Liao Min, director general of the executive office at the China Banking Regulatory Commission.

China's market mechanism still need a large improvement and so at this stage China will rely more on financial regulations to govern the industry, he said in an article published in the Asian Banker magazine yesterday. "The right way to go is directing regulation by risk- and principle-based supervision, which properly balances the relationship between government and the market," he said.

He believed combining the roles of government and the market can lay a healthy base for market discipline.

Although China and the United States use different regulatory frameworks and face unique challenges in their market fundamentals, China can still draw lessons in terms of regulatory efficiency by keeping up with developments in the global financial market, he said.

Liao urged stronger supervision of cross-business and cross-border risks, and ensure that the risk control of financial institutions can keep pace with innovation and market evolution.