Blog: Regulated Industries and AI Systems | Pillsbury – Global Sourcing … – JD Supra

Innovation has historically been driven by companies in regulated industries—e.g., financial services and health care—and some of the most intriguing use cases for generative AI systems will likely transform these industries.

At the same time, regulatory scrutiny could significantly hamper AI adoption, despite the current absence of explicit regulations against the use of AI systems. Regulators are likely going to focus on confidentiality, security and privacy concerns with generative AI systems, but other issues could arise, as well. Companies operating in key regulated industries appear to be anticipating regulatory scrutiny, which is why adoption of the newest generative AI systems will likely be slow and deliberate. However, in some cases, AI systems are being outright banned.

Despite the lack of a concrete and coherent regulatory regime, various governmental entities have begun the process of roughly outlining some guidance. The federal government recently organized the National AI Initiative, which provides for a “coordinated program across the entire Federal government to accelerate AI research and application for the Nation’s economic prosperity and national security” and aggregates input and resources from federal agencies. In addition, the U.S. Department of Commerce, via NIST, recently released an AI Intelligence Risk Management Framework, in order to “equip organizations and individuals … with approaches that increase the trustworthiness of AI systems, and to help foster the responsible design, development, deployment, and use of AI systems over time,” which may signal the risks and best practices the federal government considers as best practices when leveraging AI systems. Aside from this general guidance, each industry has only begun exploring the benefits and risks of AI adoption.

AI and machine learning is not new to the health care industry. In 2021, the World Health Organization published a report on the ethics and governance of artificial intelligence for health, which cited various uses of AI including: (i) replacing clinicians and human decision-making in diagnosis and record analysis, (ii) health research and drug development; (iii) health system management, and (iv) public health surveillance. Though there is not presently a national U.S. regulatory regime geared specifically towards AI, the FDA and HHS have developed preliminary guidance and strategy. (This guidance predates the onslaught of the newest AI systems.)

Similarly, the financial services industry is no stranger to AI, and financial regulators have begun exploring some of their concerns with the use of AI in the industry. (We have provided further details on this topic here and here.) But mostly, the guidance predates the use of more advanced AI systems, and many of the industry leaders are left balancing an unknown regulatory landscape with a growing impetus to incorporate AI systems quickly. Without a clear set of legal requirements, many financial institutions are proactively developing a set of protective standard terms that they include in both their AI-specific agreements as well as generally in their IT engagements.

Of course, existing legal and regulatory constraints around privacy, intellectual property, discrimination, and data protections still apply and may need to be taken into consideration in the use of AI products.

Given the lack of general consensus on AI-regulation and uncertainty regarding the manner in which the existing legal and regulatory regimes will be retrofit to accommodate AI systems, actors in regulated industries that begin incorporating AI systems into their IT environments may want to consider some of the following best practices as preemptive measures to mitigate the risks associated with using AI systems:

  • Consider piloting, rather than entering into long-term agreements to leverage AI systems, but beware of agreeing to standard, non-negotiated or online terms.
  • Create a walled-off development or testing environment for the business and operational people to “play” in until they can come up with concrete use cases. This sandbox environment approach may be a technological mechanism to reduce the risk of the AI system receiving sensitive date or information.
  • Ensure that the definition of data owned by the customer includes derivatives of data provided by the customer, including AI derivatives.
  • Scrutinize contractual terms around ownership of feedback to ensure they are not unduly broad. Suppliers frequently assert ownership over improvements to their technology as a result of customers’ input or feedback, but the language permitting such ownership could be used to end-run around ownership of the “improvements” to an AI system based on customers’ inputs.
  • Ensure internal policies clearly indicate whether and how employees and contractors can use AI systems. If Microsoft, a significant stakeholder in ChatGPT, is telling its employees not to put sensitive information into ChatGPT, other companies likely want to heed that advice as well.
  • Develop standard contract terms that hedge the risk of bias, reliability, transparency and explainability. These may include clear scope descriptions, representations, and warranties and indemnities.
  • If custom terms have not been negotiated and vetted for a particular AI system, review the terms and conditions available to determine how data is protected.

With all of this in mind, it ultimately appears that relative caution with implementing AI systems, and particular focus on protecting the organization’s data, can be balanced with curiosity and flexibility to try new technology, to effectively enable organizations operating in regulated entities to practice responsible use of AI systems.

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Blog: Did Brexit save Britain from France’s fate? – The Spectator

Stéphane Rozès, the author of a book entitled ‘Chaos’, was on French radio this week receiving congratulations for being a visionary. The chaos which he described in his book, published last November, is now being played out in France, as hundreds of thousands of people take to the streets. Asked to explain its cause, Rozès explained that it has been building since 1992, the year France signed the Maastricht Treaty, the beginning of the European Union. 

Rozès is not alone in this view. One of France’s best known philosophers, the left-wing Michel Onfray, has been saying the same thing for years.

‘France died in 1992, the date of the Maastricht Treaty,’ he said in an interview in 2018. ‘We gave up our sovereignty for a liberal supranational managed by a very autocratic device that has the money, therefore the media, therefore the opinion: what I call the Maastricht State.’

Onfray was naturally delighted with Brexit. One week after the Leave vote, he was one of 20 French intellectuals who signed a declaration demanding France renegotiate its Treaty with the EU.  

Saluting the ‘courage’ of the British people in voting to leave the EU, the signatories called it ‘a slap in the face for the technocratic drift in which the current European Union has allowed itself to be trapped for at least three decades’. 

Insulting the proles is never a wise move for a French president

They urged the then president, the Socialist François Hollande, to draw the right lesson from the triumph of the Leave vote, namely that ‘citizens no longer accept being governed by unelected bodies, operating in total opacity’. Brexit should serve as the catalyst to reconstruct the European project, focusing on ‘three crucial issues whose neglect has led to the collapse of the current European construction’. These were democracy, prosperity and strategic independence. 

Hollande did not heed the warning; on the contrary, he doubled down on Europe, making no secret of his disapproval with Brexit. He was, of course, encouraged in his rhetoric by the behaviour of many MPs in Westminster, who did their best between 2016 and 2019 to keep Britain in Europe. 

His successor in the Élysée, Emmanuel Macron, has been just as contemptuous. The decision to Leave was, he declared, based on ‘lies and false promises’.  

What is the EU if not a project built on lies and false promises? ‘There must be no formal hierarchy between the institutions, nor too rigid a framework for their action,’ stated President François Mitterrand in a speech to the European assembly in May 1992, three months after the Maastricht Treaty had been signed. ‘Let us show flexibility and adaptability.’  

Mitterrand also demanded ‘equal dignity between all member states’ and cautioned against ‘the risks we would run if riches, wealth, influence, the means to act, the financial resources were all concentrated in a small group’’. 

It didn’t take the French left long to realise that the EU was indeed concentrating the wealth and the influence in a small group. So when they were asked to vote ‘yes’ or ‘no’ to the EU Constitution in a 2005 referendum, they formed the bulk of the 54 per cent of the population who were opposed. Parliament ignored their will and passed the Constitution – repackaged as the Lisbon Treaty – in 2007 without putting it to the people.  

Most Socialist MPs went along with the perfidy but a few warned of grave repercussions. ‘Our fellow citizens want the country to be run by its elected representatives and not by a European and national technostructure that escapes all democratic control,’ said Georges Sarre, a minister in Mitterrand’s second government. He had been a prominent ‘No’ campaigner in the referendum, publishing a book entitled ‘Europe against the left’ 

The disaffection has therefore been brewing for years, on the right as well as the left. If the latter rage against the neoliberalism of the EU, the right’s anger is stoked by the erosion of French culture and, in particular, mass immigration. ‘There is no French culture’, declared Macron in 2017, the same year he derided workers as ‘slackers’, thereby achieving the rare feat in France of uniting the right and the left in outrage. 

Insulting the proles is never a wise move for a French president but arguably Macron’s bigger mistake since taking office is his unshakeable belief in the European vision. Yet he knows that the people don’t share his view; in a famous BBC interview in January 2018, he acknowledged that, given the chance, the French would also have likely voted to leave the EU. 

But he would never dream of giving them that chance. So the anger of the people grows, not only with Macron but with all the mainstream political parties who are just as committed to the EU. Why else have the Socialists and the Republican Parties been reduced to political also-rans in the last decade?   

Instead, voters have turned to Eurosceptic leaders, such as Jean-Luc Mélenchon and Marine Le Pen. In December, Mélenchon claimed it was one of his party’s MEPs, Manon Aubry, who helped reveal the alleged corruption in the EU, what has since been dubbed ‘Qatargate’. Thanks to her, said Mélenchon, ‘we keep our idea of Europe alive’. It also doesn’t go down well with French Eurosceptics that the country contributes €25 billion (£22 billion) to the EU budget and receives only €15 billion (£13 billion) in return. 

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The word I have heard and seen most often during the recent protests across the country is ‘Revolution’. It’s particularly common among the young, such as student union leader Imane Oulehadj, who explained that he and his peers are ‘taking to the streets to build another, more just society.’  

But the revolution that the French people need if they are to build their fairer world of liberty, equality and fraternity isn’t against the man in the Élysée but against the people in Brussels. It was they, after all, who in 2019 recommended to Macron that he reform France’s pension system. 

Brexit in its current form is not perfect for many of the 17.4 million people who voted to leave. But at least Britain has broken free from an unaccountable and unelected elite, and regained some of its sovereignty. France remains, and for as long as it does so will the chaos. 

Blog: Regulation key to boosting digital finance – – China Daily

A staff member demonstrates the payment with China’s digital yuan, or the e-CNY, during the first Global Digital Trade Expo in Hangzhou, East China’s Zhejiang province, Dec 12, 2022. [Photo/Xinhua]

Officials and experts attending the Boao Forum for Asia Annual Conference 2023 called for enhanced financial regulation to fend off potential risks and boost innovation in the finance sector in the digital finance era.

“In the era of digital finance, regulatory concepts, technology and capabilities must keep up (with the development trend) to ensure financial innovation does not come at the cost of financial stability, which will enable sustainable progress,” said Xuan Changneng, deputy governor of the People’s Bank of China, the central bank.

Xuan told a roundtable meeting at the annual conference on Friday that the Chinese government has always attached great importance to the digital economy.

Citing the Report to the 20th National Congress of the Communist Party of China, he said China has pledged to accelerate the development of the digital economy, further integrate it with the real economy and improve infrastructure construction as well as strengthen and refine modern financial regulation.

He noted that while the digital economy has changed the format, scenes and ways to provide financial services, the essence of finance has not changed, posing high challenges to financial regulation.

According to Xuan, effective financial regulation serves as a key financial infrastructure as well as a fundamental institutional arrangement to ensure the stable operation of digital finance. More efforts should be made to improve regulatory systems that are compatible with the digital economy and invest in the application of the digital technology in the finance sector.

“Technological updates are fast, with new technologies emerging every few years,” said Zhou Xiaochuan, vice-chairman of the Boao Forum for Asia. “Changes in technology and applications in various fields lead to significant changes, which is a characteristic of the new digital era.”

When it comes to digital currency, Zhou, who is former governor of the PBOC, said the definition of digital currency should not be based on someone’s own ideas and market players should not be so eager to become the winner-takes-all.

During the same meeting, Lu Lei, deputy administrator of the State Administration of Foreign Exchange, said data and information processing will face a new era, which will bring about generative artificial intelligence.

Blog: Assumptions on banking regulation risks ‘were wrong’ ahead of SVB collapse: CFPB director – Yahoo Money

CFPB Director Rohit Chopra sits down with Yahoo Finance’s Jennifer Schonberger to discuss the state of the banking system, the causes of the Silicon Valley Bank failure, and the proposals for banking safeguards.

Video Transcript


JENNIFER SCHONBERG: Welcome back to Yahoo Finance live, I’m Jennifer Schonberger. With the recent failure of Silicon Valley Bank, consumers are questioning the safety of their deposits while lawmakers and regulators are assessing how to prevent a failure like this from happening again. Joining me now in an exclusive interview is the director of the Consumer Financial Protection Bureau, Rohit Chopra. Director Chopra, thank you so much for sitting down with me and having me here at HQ.

ROHIT CHOPRA: Thank you so much, it’s great to be with you.

JENNIFER SCHONBERG: I want to kick off the conversation and ask you about the health of the banking system. Now what stresses, if any, are you seeing in consumer finance markets right now?

ROHIT CHOPRA: Well, obviously the last several weeks we saw quite a bit of anxiety from so many people in the country about whether their deposits are safe, and they are. We’ve been looking very carefully though to make sure, are there other places where consumers can be harmed or taken advantage of on all products and services? So right now, we’re not seeing any uptick in any major product area, but we are certainly not taking our eye off the ball.

When financial systems– they’re all very fragile and one little pinprick often can lead to all harm for individuals, we saw that in the last financial crisis in 2008 and we are very on guard to make sure that people are protected.

JENNIFER SCHONBERG: There’s still a lot of question marks as to why Silicon Valley Bank failed, and for that matter, Signature and Silvergate, what do you think were the major causes?

ROHIT CHOPRA: Well, in many ways, it’s similar to what we saw in past crises, panics. There’s a mix of managerial incompetence by banks but also places where the regulations may not have been where they needed to be and the regulators not always taking the steps they need to do it. We’re obviously doing a review to see what went wrong, but there’s no question in my mind that several years ago there was deregulation that occurred assuming that banks of a certain size would not create risks to the entire economy.

And that fundamental assumption was wrong. Even though Silicon Valley Bank may be just a fraction of a size of JPMorgan, Chase, CITI, Wells Fargo, it still was giant enough where its failure could have led to really serious consequences. So I think that’s such an important data point. And we now need to use that fact to really help fix the system so this does not happen again.

JENNIFER SCHONBERG: And to your point, you actually warned about the risks posed by banks with $100 billion or more in assets. You called them systemically important last year. What needs to be done to prevent a failure like this from happening again? You spoke about regulations. How do regulations need to be changed for banks of this size given the issues that ensued?

ROHIT CHOPRA: Well, it’s really tough to call some of these banks small or smaller. They’re still very large and much larger than the thousands of local banks in the country. So there’s just some basic safeguards that you always want. Bankers and their shareholders they’ve got to have some skin in the game. That means they’ve got to hold the right amount of capital, there’s got to be some real accountability on executive compensation so that they don’t take out of control risks.

They’ve got to have the cash on hand to meet when depositors want to get their money out. These are common sense safeguards that we need to make sure are in place especially to avoid catastrophic effects of one or more of their failures. We had to take extraordinary measures to contain the damage of the failures of Silicon Valley Bank and signature. But we need to make sure that we’re really learning from this and taking the right steps to prevent it.

JENNIFER SCHONBERG: Social media seemed to play a role in the speed of this. So to your point, given the new reality that we live in, do we need a certain level of liquidity and capital to prevent a failure happening in such short order that we saw?

ROHIT CHOPRA: Yeah, it’s a good point, communications are so much faster, banking is much more 24-hour, there’s more real time payments. That’s just reality, we’re not going to be able to turn back the clock on that nor should we. But it does mean that bank runs can happen more rapidly, they can happen in ways that are overnight. And we need to take that reality into consideration when setting up the right type of oversight and rules.

At the end of the day, banks are really the plumbing of the economy and when they’re not working well our whole society suffers, and that’s why it’s so important to get this right.

JENNIFER SCHONBERG: I want to ask you, the FDIC director Martin Gruenberg is reassessing, conducting a review of the deposit insurance system in this country. He’s expected to have a report out by May 1st. Given that you actually sit on the board of the FDIC, how do you think deposit insurance needs to be reformed? Should we be raising the level of deposit insurance?

ROHIT CHOPRA: I don’t have any firm conclusions on that but I’m certainly very open to that. But that can’t be the only thing we do to address this. I would not want the end of this to just be changes in deposit insurance, it is very clear that we need to beef up the oversight and really look hard at those regulations that were gutted a few years ago.

JENNIFER SCHONBERG: Also this week we heard from FDIC chair Gruenberg. He testified before Congress and he was asked whether community banks should be exempt from having to pay for Silicon Valley Bank’s failure. He said that the FDIC does have discretion but ultimately it’s up to the board to make that decision. Again, since you are a board member, what’s your thinking on this?

ROHIT CHOPRA: Yeah. I agree with him, I think the law tells us that we’ve also got to look at the institutions that benefited from some of those emergency actions. I think it would be hard to say that community banks played a role in causing this if anything they are offering a safer way for the system to operate. So I think that’s right, I think we have to take a hard look about whether we limit or exempt the smallest and safely operating banks from having to pay for this.

JENNIFER SCHONBERG: Director Chopra, thank you so much for your insight, I so appreciate, it hope to speak with you again soon.

ROHIT CHOPRA: All right. Thanks again.

Blog: Rishi Sunak delays post-Brexit bonfire of EU law over fear of mistakes – The Times

Rishi Sunak’s “bonfire” of EU laws will be delayed by six months under plans being considered by ministers.

The prime minister had pledged to scrap, amend or retain all EU-derived laws on Britain’s statute books by the end of the year. However, officials are struggling to cope with the scale of the task given that 4,000 laws are potentially affected.

There are concerns that mistakes could be made with far-reaching consequences in any continued attempt to hit the December 31 deadline. No 10 is said to be weighing up a six-month extension, meaning the pledge would still be fulfilled before the next election, which must take place before January 2025.

The policy now falls under Kemi Badenoch, the business and trade secretary. A Whitehall

Blog: Why banks are reluctant to borrow at the Fed’s “discount window” – Marketplace

In the past several weeks, banks have been taking out emergency loans from the Federal Reserve to ensure they can cover withdrawals from customers.

In the week that ended Wednesday, banks tapped more than $152 billion from two backstop lending facilities set up by the Fed. That’s down from $164 billion borrowed the week before — a sign that the threat of more bank runs may be waning.

One of those emergency lending programs is called the discount window. And banks really try to avoid it.

When we write a check, our bank has to make sure our money is available to cover it, right? But what if the bank can’t move money fast enough for it to be there? Well, they borrow it, usually just for, like, a day and usually from other banks. 

But sometimes, “the other counterpart banks are saying, ‘Oh, you’re in a little more trouble than we are comfortable with. You should go to the Fed,’” said Peter Conti-Brown, a professor of financial regulation at Wharton. 

So back in the olden days — like 1913, when the Fed was created — a bank would go to an actual window at the Fed and get a loan. Problem solved! At least that’s how it used to work.

“That discount window has mostly atrophied from the 1950s until 2008,” Conti-Brown said.

During the financial crisis around 2008, of course, all kinds of banks had to use the discount window. But in normal times, the Fed has discouraged them from using it, Conti-Brown added. And banks — big ones, anyway — haven’t used it much. 

The reason? It kinda just looks bad. “‘Please sir, may I have another? We’re a very poor bank and having some trouble,’” Conti-Brown said.

This image problem is very real. Bill Nelson, chief economist at the Bank Policy Institute, spent 20 years at the Fed. Some years back, a friend of his got a job as a bank treasurer. 

“When he took his position, he was told if he were to end up borrowing from the discount window, there would be two phone calls,” Nelson said. “One would be from the president of the New York Fed asking what happened and the second from HR asking him to clear out his desk.”

In 2008, the Fed tried to set up other ways for banks to borrow, but it didn’t solve the stigma problem, Nelson said. “It’s a tremendous problem because you can think of the discount window, in many instances, as a safety valve.”

But it’s a safety valve that banks aren’t comfortable using enough, he added. Silicon Valley Bank could probably have had a softer landing, according to Conti-Brown, if it had been prepared to use the discount window earlier

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Blog: Chinese Officials Call for Stronger Global Regulation of Crypto –

Two Chinese officials have called for stronger regulation of cryptocurrency around the world.

Xuan Changneng, a deputy governor at the People’s Bank of China, said Friday (March 31) that while regulators should allow room for innovation, they should also respect the existing rules and test the new technologies, Bloomberg reported Friday.

Speaking at the Boao Forum, Changneng pointed to examples of risks and fraud associated with crypto, including the failures of two U.S. banks that had provided financial services for crypto-related firms, according to the report.

“The regulation philosophy, technology and capability must be upgraded to ensure financial innovation won’t come at the cost of financial stability,” Changneng said, per the report.

During the same event, Liao Min, a vice finance minister of China, said that China needs to get “deeply” involved in international cooperation and coordination of standards, according to the report.

As PYMNTS reported March 3, the premise and promise of the crypto sector have been battered by bad actors and back-door platforms, leaving its future more uncertain than ever.

In addition, U.S. regulators, including the Federal Reserve, have told financial institutions to be wary of “potential heightened liquidity risks” presented by certain sources of funding from crypto-related entities, while the Securities and Exchange Commission (SEC) is keeping up its full-court press on the digital asset industry by telling investment advisers to be wary of cryptocurrency trading and lending platforms, emphasizing that they cannot be relied upon as qualified custodians.

A week later, noting a series of recent lawsuits targeting crypto players, PYMNTS reported that observers critical of crypto are wary of granting the industry the validatory halo that proper regulation might bestow.

Instead, they prefer to bring legal actions against it and let the sector dissolve in far-flung jurisdictions, the thought being the regulating crypto might encourage deeper and more difficult to disentangle relationships between the digital asset ecosystem and the traditional financial sectors — thereby generating greater systemic risks.

On March 23, the SEC issued an alert emphasizing to investors that cryptocurrency offerings across the U.S. market may be illegal because they are not registered with the regulator.

As PYMNTS reported the following day, crypto’s path to regulatory acceptance is getting longer.


Blog: China makes sweeping reform to financial sector regulation – OMFIF

While the world is preoccupied with the stability of the western banking system, China has been busy overhauling its financial regulatory architecture. The dramatic changes are China’s fourth major reform in the past two decades, bringing the financial regulatory system under the tight, centralised control of the Chinese Communist Party.

China’s financial sector is working to establish itself as a safe and efficient system. The country has been building its supervisory capacity since 2003 to address the fault lines. It has undergone reviews by the International Monetary Fund, the Financial Stability Board and the Basel Committee. In 2017 and 2018, two new state institutions were added to the regulatory architecture to strengthen financial stability coordination and supervision of banks and insurers.

With a major new reform announced on 7 March, this work has gone even further.

Tight grip on policies and governance

China has announced plans to create a new regulatory body – the National Financial Regulatory Administration – to replace the China Banking and Insurance Regulatory Commission. Responsibility for regulating China’s financial sector will move to this new administration and away from the People’s Bank of China, CBIRC and the Financial Stability and Development Committee.

The reform targets four broad areas: the financial stability framework; supervision, consumer and investor protection; functioning of capital markets; and organisation of the central bank.

It aims to oversee money, markets and financing to ensure China becomes a ‘moderately developed state’ by 2035 (an avowed purpose of the National Parliamentary Committee). The party will tightly control the financial sector’s policies and governance, including resources and salaries. In other words, China has made it explicit that the financial system is an arm of the state – more a ‘utility’ as opposed to a commercially orientated, market-based system.

While China has always been a state-dominated economic system, the March 2023 shift is a regime change. It raises uncertainties about vital daily interactions, such as regulatory governance and prompt enforcement of corrective action, financial sector policies, macroeconomics and entry of foreign economic agents into the domestic market, alongside integrating Chinese financial firms into global finance.

China as a global superpower

It is atypical for China to implement such sweeping reforms. It prefers a well-staged approach to win party-level support. While the complexity of the financial sector grows, the financial markets have witnessed several episodes where hidden risks have abruptly amplified. An empowered, centrally controlled architecture may help avoid this in future. The central bank must also rid itself of legacy functions to focus on monetary management, payments, financial technology and internationalisation. Political economy considerations, however, have dominated the push for the new reform.

For a long while, the party’s preoccupation has been with China’s future as a global superpower, with social harmony at home. A view building up within the party since before the 2008 financial crisis is to regard economic (and financial) security as an instrument for national security and China’s global ambitions. Such thinking prompted the setting up of its first sovereign fund, with banks and state-owned enterprises taking on a larger global footprint and China becoming the number one non-traditional sovereign lender to other sovereigns.

The March 2023 economic and financial governance reform aims to ‘modernise’ economic administration in China. The party believes the current architecture is not fully aligned with building China into a modern socialist market economy. Therefore, the party’s leadership will guide and be accountable for the socialist modernisation of the financial regulatory and institutional set-up.

Guard railing the financial structure  

The reformed regulatory architecture will depart from the principles outlined in various international financial standards. While it remains China’s prerogative to oversee its financial sector the way it sees best, formal clarifications and communicating the operating details of the new arrangement will help to reassure that, despite a regime shift, the financial industry will retain its strengths and that party politics and non-economic provincial interests will not override the effectiveness of regulation and supervision.

China cannot set aside the practices enshrined in globally accepted standards for effective regulation and supervision. Given that China is seeking the status of a moderately developed state by 2035, using the financial sector for political and social priorities – and national security goals – must not divert attention from continuing to clean up and stabilise the financial system.

The world will watch how the party achieves its broader goals and effectively regulates the financial sector. China knows that prudential rule-making responsibilities will only grow with the rising complexities of climate-related exposures, rapid financial technology developments and artificial intelligence and machine learning use in the financial services industry.

The expectation from the international standard-setting community is for China to continue advancing its participation. Maintaining a transparent, operationally effective and high-quality regulatory regime is the best way for China to attain its broader economic and strategic goals.

Udaibir Das is the former Assistant Director and Adviser of the Monetary and Capital Markets Department at the International Monetary Fund. He is a Non-Resident Fellow at the National Council of Applied Economic Research, a Senior Non-Resident Adviser at the Bank of England, a Distinguished Fellow at the Observer Research Foundation America and a Distinguished Visiting Faculty at Kautilya School for Public Policy.