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International Coordination in Banking Supervision Needed in Network Economy
The network economy has given rise to new challenges for financial supervision and international coordination is becoming more and more crucial, China's central bank researchers said.
Major changes have taken place in the relations between financial authorities, banks and consumers as a result of the development of the network economy, Xie Ping and Yin Long, both senior researchers at the People's Bank of China, said in a report to the International Symposium on Network economy and Economic Governance here Friday.
Huge amounts of sudden funds' transfer between financial markets across the world has become realizable and global transmissions of financial signals can now be completed shortly through the network, they said.
While efficiency improves remarkably, the probability of financial risk contagion has been increasing, the researchers said.
"The interaction of various financial business, clients and countries, and the huge flows of international speculating capital increase the risk correlation between various economies," they said.
"Given the rapid changes in the network economy, any rules unilaterally stipulated by the regulators will possibly face the dilemma that those targeted by the rules have changed before they are enforced," they said.
The researchers pointed out that it will be ineffective to regulate the network finance through traditional means and policy readjustments are now needed in financial supervision.
All the authorities in the world face cross-border business and clients as a result of the worldwide expansion of the Internet, which needs closer international coordination of financial supervision, they said.
The new environment requires the establishment of new regulations and market infrastructure which are fit for international standards so as to ensure the development of the network economy in the future, the researchers said.
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