Caixin
Oct 26, 2021 05:47 AM
FINANCE

Central Bank Charts Orderly Growth Track for Financial Industry

China sets first compulsory national standards for the financial industry, which will be applied to counterfeit money-detector equipment
China sets first compulsory national standards for the financial industry, which will be applied to counterfeit money-detector equipment

China’s central bank issued dozens of new standards aimed at pushing the country’s fast-evolving financial industry onto an orderly growth track, including the first set of criteria for the burgeoning green finance sector.

The 47 types of standards published by the People’s Bank of China (PBOC) cover a wide range of financial activities including product and service offerings, data management, security, clearing and settlement, fintech, supervision and green finance. The standards — technical specifications and requirements for financial industry players to follow — include 19 national requirements and 28 to be applied industrywide.

The documents include China’s first compulsory national standards for the financial industry, which will be applied to counterfeit money-detector equipment. Unlike other requirements that are mainly based on voluntary acceptance, the standards set compulsory technical specifications for counterfeit money-detector manufacturers to follow starting Aug. 1, 2023.

The new requirements will help prevent financial risks and secure people’s property safety, said Li Han, a senior official at the State Administration for Market Regulation.

The new standards for green finance apply to a crucial sector as China advances a sweeping transition to meet its goal of achieving net-zero carbon emissions by 2060 in the fight against climate change. Carbon dioxide is the main greenhouse gas causing global warming. The new standards cover financial institutions’ disclosure of environment-related information and financing activities.

Chinese companies have been racing to issue carbon-neutrality bonds and asset-backed securities under government backing for emission-reduction projects. However, China’s rapidly growing carbon financing market lacks clear and unified regulatory standards to guide financiers to worthwhile projects and help them assess the carbon-reduction benefits of their investments, analysts said.

Yang Fuyu, chairman of the China Financial Standardization Technical Committee, said the newly issued standards set unified requirements for green bond financing and green financial products and services based on China’s carbon emission goals. China will continue working on standards for financial institutions’ emissions assessment and evaluation of progress on environmental, social and governance issues — known as ESG, Yang said.

The central government issued guidelines Oct. 19 on development of national standards, requiring the financial industry to speed up standard-setting by 2025, especially for the green and digital finance sectors.

The recently issued standards also include specifications on the application of machine learning algorithms in finance, setting requirements on how the new technology can be designed, applied and managed. The standards also spell out criteria for financial data protection and management.

The PBOC’s release of standards reflects the needs for unified rules as the country’s finance sectors increasingly embrace new technologies such as artificial intelligence, big data and blockchain, Yang said.

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (hello@caixin.com)

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