China’s central bank outlined sweeping new regulations aimed at curbing financial risk in the asset management industry on Friday, in the latest signal of its determination to rein in the country’s runaway shadow banking sector, the Financial Times reports. The new rules, affecting $15tn of asset-management products, are aimed at unifying regulatory practices across the financial industry and will come into force in June. They will prohibit asset managers from promising investors a guaranteed rate of return, while also requiring them to set aside 10% of the management fees they collect for provisioning purposes. Wealth management products have been issued by banks, insurance companies and other financial firms that come under the auspices of different regulators. Friday’s statement was issued jointly by the People’s Bank of China as well as the banking, securities and insurance regulators but will cement the central bank’s authority. The PBoC is also expected to play a dominant role in a recently established Financial Stability Board.
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