Private financial markets cannot function properly unless there is enough information and reporting both to market participants and to relevant regulators and supervisors. The financial crisis evidenced the increasing opaqueness of the financial sector and the resulting counterparty risk externality. Regulatory initiatives that are underway to remedy these issues are therefore of utmost importance.
In terms of financial policies, the People’s Bank of China (PBC) launched monetary and credit policies in the amount of RMB300 billion, RMB500 billion and RMB1 trillion respectively last year to support market entities and rolled out another RMB300 billion worth of central bank lending in September this year, which were earmarked for the support of micro, small and medium-sized enterprises (MSMEs).