What happened: The People’s Bank of China (PBOC) said on Saturday that it will gradually develop a system of rules to regulate financial technology. It also pledged to fully utilize the technology to improve the flow of credit and reduce financing costs for businesses, and plans to enhance new technology applications to improve risk prevention capabilities.
Why it’s important: Due to rapid digitization and adoption of e-payments, China has emerged as a major market for financial technology. The fintech boom has played a significant part in driving financial inclusion, but many of these new financial service providers lack measures to manage risks or protect consumers. Risk aversion and control has been a top priority for the Chinese government since 2017. The online lending sector has been hit especially hard by regulatory crackdowns.