National Financial Regulation Authority (NAFR)

History

2023: Establishment of the organ

At the end of December 2023, it became known that the authorities are PEOPLE'S REPUBLIC OF CHINA reducing the role Central Bank (People's Bank of China, PBOC) in the development of solutions and as a link with international markets and regulators. In fact, the Central Bank will be sidelined, while control over all financial activities, except for the securities market, will be exercised by the National Financial Regulation Administration (NAFR).

It is noted that China faced a worsening economic situation after the COVID-19 pandemic and a debt crisis that hit the real estate sector and local authorities. At the same time, the influence of the once powerful PBOC has seriously decreased: since March 2023, Beijing has put the Central Bank under the control of the Communist Party-led supervisory body, the Central Financial Commission (CFC). The staff of this structure includes about 100 employees who control financial issues. However, as part of the reform, the NAFR will absorb more than 1,600 district-level PBOC branches. As of the end of 2021, the Central Bank had 1,761 such branches.

PRC authorities reduce the role of the Central Bank

George Magnus, an employee of the China Center at Oxford University, notes that the decline in the status of the PBOC is one of the main changes associated with the new financial structure. According to him, the PBOC's course towards modernization and reform was "a kind of Trojan horse that allowed the government to experiment with financial liberalization and use other market mechanisms within a state-dominated system."

Although the PBOC has always operated under the auspices of the Council of State, its powers in financial matters have been clearly defined. He was seen as a "hotbed of talent" in the decision-making apparatus in China, and his technocrats played a key role in shaping financial regulation for three decades. But as a result of the reform, the PBOC has practically no functions left.^[1]

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