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Prof. Huang Yiping: Digital Finance Tells an Important China Story

Jun 12-2023   



China’s digital finance tops the world in both market share and penetration rate, making it a significant China story, said Prof. Huang Yiping, Deputy Dean of the NSD and Director of PKU Institute of Digital Finance (IDF), in an exclusive interview with Southern Weekly.

 

As China’s digital finance dashes to the forefront in the world, it has drawn constant attention from international institutions. For three consecutive years, IDF has been invited by the International Monetary Fund (IMF) to jointly hold close-door seminars in the US - an unprecedented undertaking by the IMF. IDF has also set up joint research teams respectively with Bank for International Settlements (BIS), IMF, and the Brookings Institution to look into issues of China’s digital finance.

 

On the global digital finance landscape, the US boasts relatively advanced technology and the UK pioneers business models and policies, but China has built the best market, said Prof. Huang.  With nearly one billion active users of mobile payment, China has surmounted the challenges of inclusive finance, which is tantamount to a revolutionary breakthrough in the eye of international institutions. China’s digital finance is accomplishing what traditional finance couldn’t do in the past, such as granting loans through online, contactless services during the pandemic.

 

Prof. Huang also believed that financial institutions, by using digital credit and not collaterals, can cancel out or weaken the ‘Financial Accelerator’ mechanism coined by Ben Bernanke, former Chairman of US Federal Reserve. As a result, credit-based loans can theoretically lead to more stability in finance. However, he also cautioned that as Big Tech loaning services tend to rely heavily on cash flows, more thoughts and research are warranted concerning the possibility of the formation of a new, unstable financial mechanism.

 

Prof. Huang reckoned that digital credit doesn’t command full predictive power, especially in times of cyclical shifts in the economy or appearance of sudden shocks, but it is more potent than other risk control methods thanks to its use of real-time data, constant iteration, and relatively short loaning terms.

 

As digital finance goes apace in innovation, it is of critical importance that financial institutions work with regulatory authorities through ‘sandbox supervision’, said Prof. Huang.

Prof. Huang Yiping: Digital Finance Tells an Important China Story

Jun 12-2023   



China’s digital finance tops the world in both market share and penetration rate, making it a significant China story, said Prof. Huang Yiping, Deputy Dean of the NSD and Director of PKU Institute of Digital Finance (IDF), in an exclusive interview with Southern Weekly.

 

As China’s digital finance dashes to the forefront in the world, it has drawn constant attention from international institutions. For three consecutive years, IDF has been invited by the International Monetary Fund (IMF) to jointly hold close-door seminars in the US - an unprecedented undertaking by the IMF. IDF has also set up joint research teams respectively with Bank for International Settlements (BIS), IMF, and the Brookings Institution to look into issues of China’s digital finance.

 

On the global digital finance landscape, the US boasts relatively advanced technology and the UK pioneers business models and policies, but China has built the best market, said Prof. Huang.  With nearly one billion active users of mobile payment, China has surmounted the challenges of inclusive finance, which is tantamount to a revolutionary breakthrough in the eye of international institutions. China’s digital finance is accomplishing what traditional finance couldn’t do in the past, such as granting loans through online, contactless services during the pandemic.

 

Prof. Huang also believed that financial institutions, by using digital credit and not collaterals, can cancel out or weaken the ‘Financial Accelerator’ mechanism coined by Ben Bernanke, former Chairman of US Federal Reserve. As a result, credit-based loans can theoretically lead to more stability in finance. However, he also cautioned that as Big Tech loaning services tend to rely heavily on cash flows, more thoughts and research are warranted concerning the possibility of the formation of a new, unstable financial mechanism.

 

Prof. Huang reckoned that digital credit doesn’t command full predictive power, especially in times of cyclical shifts in the economy or appearance of sudden shocks, but it is more potent than other risk control methods thanks to its use of real-time data, constant iteration, and relatively short loaning terms.

 

As digital finance goes apace in innovation, it is of critical importance that financial institutions work with regulatory authorities through ‘sandbox supervision’, said Prof. Huang.