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Report on Building a Powerful Digital-Finance Country Released

Jan 19-2024   



How to Build a Powerful Digital-Finance Country, a report headed by Prof. Huang Yiping, Deputy Dean of NSD of Director of PKU Institute of Digital Finance (IDF), has been released recently. Members of the research team include Liu Xiaochun, Deputy Dean of Shanghai Finance Institute (SFI); Huang Zhuo, Deputy Director of IDF; and Sheng Zhongming and Yang Yuemin, research fellows with China Finance 40 Forum (CF40).

 

Digital finance won’t change the nature of finance, but it can alter some mechanisms and characteristics of the operation of digital finance through enhancement of accessibility, efficiency, and risk controls, says the report. As a result, finance services can achieve quality improvement, and national financial strategies can be better served.

 

The research team attended Singapore’s Fin-Tech Fair and conducted extensive survey of its regulatory authorities, financial institutions, and digital finance firms and had two major findings. One is that despite its lack of original technology and market scale, Singapore has succeeded in developing into an international Fin-Tech hub mainly by creating an open, flexible and friendly policy environment. The other is that Chinese digital finance enterprises enjoy high popularity in Singapore and other southeast Asian markets thanks to their technologies, models, and experiences, all of which have been well tested in the Chinese market. Such learnings significantly inspired the researchers to contemplate China’s path to developing into a powerful digital-finance country. Overall, the researchers believe that building a strong digital finance system requires the joint efforts of digital finance firms and regulatory authorities.

 

According to the report, China has a world-leading digital finance industry, and keeping the lead hinges on the innovative capability of the companies, which in turn largely depends on policy environment. It observes that ad-hoc regulating efforts concerning platform-based finance have wrapped up and are being superseded by normalized regulating with the purpose of enabling digital finance to better serve the real economy on the premise of reining in risks.

 

A powerful digital-finance system, besides being highly efficient and low in costs as well as providing substantial support to the real economy, must also be an open one and have global influences. China should welcome international companies to its market, says the report. At the same time, it should also support domestic digital-finance firms to develop overseas business. Besides presence in southeast Asia, the companies can tap the huge market potential in countries along Belt and Road. Given the political sensitivity of financial firms’ overseas development, the report also calls for more thoughts and explorations concerning relevant risks.

 

Building a powerful digital-finance country is closely related to three key words: innovation, regulation, and openness. Accordingly, the research team offers policy advice to drive the process and achieve high-quality economic growth. All financial transactions, including the entirety of digital finance, should be brought into regulatory frameworks, and supervision should be stepped up to root out loopholes and irregularities, proposes the report. In addition, responsive regulatory practices can be used on certain innovative businesses with the aim of encouraging and supporting innovations while maintaining risk controls. Thirdly, regulatory policies should factor in certain idiosyncrasies of digital technology and refrain from treating it just like traditional economy. Furthermore, it is advisable to build high-quality software and hardware infrastructure and environment. Fifthly, two-way opening-up should be facilitated so that domestic firms can better develop overseas business and expand international influences. Lastly, some areas like Shanghai Pilot Free Trade Zone or its subordinate Lin-Gang Special Area, or Guangdong-Hong Kong-Macao Greater Bay Area can be designated as digital finance innovation pilot zones to achieve product, technology, and regulatory innovations.

Report on Building a Powerful Digital-Finance Country Released

Jan 19-2024   



How to Build a Powerful Digital-Finance Country, a report headed by Prof. Huang Yiping, Deputy Dean of NSD of Director of PKU Institute of Digital Finance (IDF), has been released recently. Members of the research team include Liu Xiaochun, Deputy Dean of Shanghai Finance Institute (SFI); Huang Zhuo, Deputy Director of IDF; and Sheng Zhongming and Yang Yuemin, research fellows with China Finance 40 Forum (CF40).

 

Digital finance won’t change the nature of finance, but it can alter some mechanisms and characteristics of the operation of digital finance through enhancement of accessibility, efficiency, and risk controls, says the report. As a result, finance services can achieve quality improvement, and national financial strategies can be better served.

 

The research team attended Singapore’s Fin-Tech Fair and conducted extensive survey of its regulatory authorities, financial institutions, and digital finance firms and had two major findings. One is that despite its lack of original technology and market scale, Singapore has succeeded in developing into an international Fin-Tech hub mainly by creating an open, flexible and friendly policy environment. The other is that Chinese digital finance enterprises enjoy high popularity in Singapore and other southeast Asian markets thanks to their technologies, models, and experiences, all of which have been well tested in the Chinese market. Such learnings significantly inspired the researchers to contemplate China’s path to developing into a powerful digital-finance country. Overall, the researchers believe that building a strong digital finance system requires the joint efforts of digital finance firms and regulatory authorities.

 

According to the report, China has a world-leading digital finance industry, and keeping the lead hinges on the innovative capability of the companies, which in turn largely depends on policy environment. It observes that ad-hoc regulating efforts concerning platform-based finance have wrapped up and are being superseded by normalized regulating with the purpose of enabling digital finance to better serve the real economy on the premise of reining in risks.

 

A powerful digital-finance system, besides being highly efficient and low in costs as well as providing substantial support to the real economy, must also be an open one and have global influences. China should welcome international companies to its market, says the report. At the same time, it should also support domestic digital-finance firms to develop overseas business. Besides presence in southeast Asia, the companies can tap the huge market potential in countries along Belt and Road. Given the political sensitivity of financial firms’ overseas development, the report also calls for more thoughts and explorations concerning relevant risks.

 

Building a powerful digital-finance country is closely related to three key words: innovation, regulation, and openness. Accordingly, the research team offers policy advice to drive the process and achieve high-quality economic growth. All financial transactions, including the entirety of digital finance, should be brought into regulatory frameworks, and supervision should be stepped up to root out loopholes and irregularities, proposes the report. In addition, responsive regulatory practices can be used on certain innovative businesses with the aim of encouraging and supporting innovations while maintaining risk controls. Thirdly, regulatory policies should factor in certain idiosyncrasies of digital technology and refrain from treating it just like traditional economy. Furthermore, it is advisable to build high-quality software and hardware infrastructure and environment. Fifthly, two-way opening-up should be facilitated so that domestic firms can better develop overseas business and expand international influences. Lastly, some areas like Shanghai Pilot Free Trade Zone or its subordinate Lin-Gang Special Area, or Guangdong-Hong Kong-Macao Greater Bay Area can be designated as digital finance innovation pilot zones to achieve product, technology, and regulatory innovations.