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Senior EU official calls for close EU-China cooperation in financial service

September 13, 2018


Abstract : European Commission Vice President Valdis Dombrovskis has called for close cooperation between the European Union (EU) and China in financial services, urging both sides to work together to make international financial system "safe, stable and effici

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BRUSSELS, Sept. 12 (Xinhua) -- European Commission Vice President Valdis Dombrovskis has called for close cooperation between the European Union (EU) and China in financial services, urging both sides to work together to make international financial system "safe, stable and efficient."

The Commission Vice President for Euro and Social Diologue, who is also in charge of EU's Financial Stability, Financial Services and Capital Markets Union, made the remarks during an exclusive interview with Xinhua.

Dombrovskis has planned to go to China for an official visit on financial market matters in Beijing and also for the World Economic Forum in Tianjin, a northern Chinese port city, later this month.

STRATEGIC COOPERATION ON FINANCIAL SERVICE

"China is a strategic partner for the EU. We have many economic and other common interests, which call for close cooperation. My visit is intended to contribute to feeding our strategic cooperation, with a particular emphasis on financial services," said Dombrovskis.

The Vice president said that two-way investment between China and the EU has risen over the last few years, including in the financial sector and urged both sides to keep the momentum

"This is a very dynamic sector, which evolves rapidly. Because of its international nature, it is key that regulators and supervisors keep each other informed of developments within their respective jurisdictions and work together to identify and resolve issues," said the former Prime Minister of Latvia from 2009 to 2014.

He said the EU welcomes the reforms introduced by the Chinese government to facilitate further investment. And the EU also welcomes the progress that was made in the negotiations on the Comprehensive Agreement on Investment at the EU-China Summit of July 2018. "We should keep the momentum it created," he said, adding that he intended to explore with Chinese authorities possibilities of cooperation in an international context.

"Both China and the EU are global players in the area of financial services and should take responsibility to make the international financial system safe, stable and efficient," said the EU senior official.

To reach that goal, the EU and China need to work together in international forums like the G20 and the Financial Stability Board.

"It is important that we don't consider finance as an economic sector that operates in a vacuum. On the contrary, it is essential in the smooth running and shaping of an economy," he said.

SUSTAINABLE FINANCE

Meanwhile, Dombrovskis noted that financial services can play a role in promoting sustainable growth. Sustainable finance is a priority for the EU, he said, expressing hope "China will help us with promoting it at international level."

He said that the European Commission has already adopted in March the Action Plan on Financing Sustainable Growth and then in May three legislative proposals to deliver it to encourage the EU financial sector to invest in a greener and cleaner economy.

Banks can play a key role in financing the decarbonisation of the European economy and the main challenges for European banks now are to readjust their business models to become more sustainable, and to ensure that environmental risks are fully integrated in financial decision making and risk strategies, he told Xinhua.

"Sustainable finance is a cross-border issue and therefore China-EU cooperation in sustainable finance is indispensable," the vice president said, adding that a stronger partnership on sustainable finance could be further pursued although a bilateral exchange of views has already taken place.

He said in the context of the post-crisis revamp of financial regulation at the global level, the EU has done a lot to strengthen the resilience of its banks, including those with a global reach. "Yet some vulnerabilities remain, of course, and the EU has completely focused on addressing them, e.g. via its efforts to advance Banking and Capital Market Unions. "

As for China's financial markets, Dombrovskis said though there are vulnerabilities, governance and transparency have improved markedly in recent years, in parallel with the increased access granted to foreign investors. some of the risks are moving outside of the regulated perimeter and into the "shadow" banking sector. What bears close monitoring is that some of the risks are moving outside of the regulated perimeter and into the "shadow" banking sector as supervision tightened.

The EU and China both believe in the importance of preserving the effectiveness of the multilateral economic governance system. "We do have a good cooperation with the Chinese supervisory authorities, both on a bilateral basis, and within global," said the senior official.

"I am confident this will continue, including in newly topical areas such sustainable finance," he added.


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