PBoC Flexes Political Muscle

Bloomberg: As China Regulatory Revamp Looms, PBOC Gears Up for Central Role

The central bank’s governor Zhou Xiaochuan criticized the local regulatory system at a Group of 20 meeting in Shanghai in February, saying its performance through the financial turmoil of 2015 was "unsatisfactory" and the shake-up should be coordinated with the new macro prudential framework in mind.

"The central bank is expanding its authority and scope of management in the name of macro-prudential assessment," said Ming Ming, head of fixed income research at Citic Securities Co. in Beijing. He anticipates resistance from the nation’s other three regulators that currently oversee banking, insurance and securities.

The China Securities Regulatory Commission was established in 1992 and led by Zhou from 2000 until 2002, when he became PBOC governor. The CSRC has been bruised recently, with its performance criticized by Premier Li Keqiang, and its chairman removed in February. The new head, Liu Shiyu, is a former PBOC deputy governor.

The banking watchdog, formed in 2003, has also been criticized by analysts for not doing enough to curb the rampant borrowing for leveraged share trading that exacerbated last year’s swings.