There are of course challenges and trade-offs to make in delivering effective regulation. Being agile may mean less predictability if you define ‘predictable’ as meaning a slowness to action. But there is a difference between a responsive regulator and a reactive regulator, and a balance must be struck between regulatory rigidity and regulation as something that can be changed on a regular basis17.
Excessive liquidity, inflation, asset price bubbles, periodic non-performing loans and other risks may build up and undermine asset quality and resilience of China’s financial sector.