By Wang Shen
The China Banking and Insurance Regulatory Commission (CBIRC) emphasized at the 10th Lujiazui Forum (2018) on June 14 that the peer-to-peer (P2P) service should strictly define itself as an infomediary to survive, as reported by The Paper.
The P2P service is a decentralized platform whereby two individuals interact directly with each other, without the intermediation by a third party. The P2P platform is usually used for online lending and other financial services.
Li Junfeng, the director of the Inclusive Finance Department from the CBIRC, stated that a P2P platform could not become a business credit center or a capital pool, and companies cannot use a P2P mechanism to raise funds for themselves.
The related supervision departments should take time to observe and distinguish between real and legitimate P2P platforms.
Recently, there is an issue that many companies apply for the licenses to operate for small loans, private placement, and consumer finance. Li said that the market would be in chaos if the financial businesses were not supervised and licensed. However, there is also a question that if all the financial services and companies should be permitted, which should be further studied and researched on.
Some financial institutions might contain spillover risks, which means when their P2P platforms fail, the influence and risks will spread to commercial banking or financial system, and might even result in incidents that affect social stability.
Li said that these financial institutions must be licensed and receive prudential regulations. The related supervision departments could apply the fin-tech theory of "a regulatory sandbox" to some financial services and allow certain P2P companies to start pilot projects in a few areas.
The regulatory sandbox is an innovation in the supervision systems, created by the Financial Conduct Authority. The regulatory sandbox allows businesses to test innovative products, services, business models and delivery mechanisms in the real market with real consumers.
