China will set up a banking and insurance regulatory commission, according to a plan submitted to the national legislature, the National People's Congress (NPC) that would be a major overhaul for the financial sector aimed at curbing risk.
The new commission is primarily responsible for supervising the banking and insurance industries, preventing and dissolving financial risks and protecting consumers' rights.
The CIRC and the China Banking Regulatory Commission (CBRC) will be dismantled, as a part of institutional restructuring of the State Council.
The Communist Party which controls the government has stated that its priorities this year include reducing financial risk following a run-up in corporate and local government borrowing that prompted global rating agencies to cut Beijing’s government credit rating last year.
The NPC document says that the new regulator will be capable of “holding the bottom line to prevent systematic financial risk”.
It also states that the responsibilities of the two separate regulators currently overlap in some areas, leaving regulatory roles unclear.
The merger of the two regulators is seen as a move which would give the government a better handle on supervising the insurance and banking sectors which have seen increasing cross-sectoral transactions that hide levels of lending and risk.
The two regulators will hand off duties such as proposing laws to the People’s Bank of China in a sign that the central bank is stepping up its regulatory role.
The proposed changes set out in the NPC document are expected to be approved by lawmakers who end their annual session on 20 March 2018.