China Intensifies Crackdown on Foreign Exchange Violations, Emphasizing Financial Security
Beijing, September 6, 2024 – China’sState Administration of Foreign Exchange (SAFE) has reiterated its commitment to maintaining a high-pressure crackdown on illegal and irregular activities in the foreign exchange market. This commitmentwas highlighted by Li Hongyan, Deputy Director of SAFE, during a press conference held on September 5th, focusing on Promoting High-Quality Development.
Li emphasized the importance of a two-pronged approach to foreign exchange market management, combining macro-prudential and micro-supervision strategies. This approach aims to ensure a robust and stable foreign exchange environment while facilitatinglegitimate cross-border capital flows.
We will strengthen monitoring, early warning, and response mechanisms for cross-border capital flows, enhance comprehensive supervision in the foreign exchange sector, and maintain a high-pressure crackdown on illegal and irregularactivities, Li stated. We will safeguard the bottom line of financial security under the conditions of openness.
This declaration underscores China’s commitment to maintaining financial stability in the face of increasing global economic uncertainties and potential risks associated with cross-border capital flows. The high-pressure crackdown strategy aims to deter individuals and institutionsfrom engaging in illicit activities that could destabilize the market and undermine the country’s financial security.
The SAFE’s emphasis on macro-prudential and micro-supervision reflects a multifaceted approach to managing the foreign exchange market. Macro-prudential measures focus on systemic risks and overall stability,while micro-supervision targets individual transactions and institutions to ensure compliance with regulations.
This comprehensive strategy is further strengthened by the SAFE’s commitment to enhancing monitoring and early warning systems for cross-border capital flows. This proactive approach allows for timely identification and mitigation of potential risks, ensuring a more stable and predictable foreign exchangeenvironment.
The SAFE’s commitment to maintaining a high-pressure crackdown on illegal activities is evident in recent actions taken against individuals and institutions involved in foreign exchange violations. In August, the SAFE imposed a fine exceeding 15 million yuan (approximately $2.1 million) on an individual for illegal foreign exchange trading. This case serves as a strong deterrent to those considering engaging in such activities.
The SAFE’s crackdown on foreign exchange violations is not limited to individual cases. The agency has also been actively collaborating with other government bodies, such as the Ministry of Public Security, to combat foreign exchange-related crimes. This collaborative approachstrengthens the enforcement of regulations and enhances the effectiveness of the crackdown.
China’s commitment to maintaining a stable and secure foreign exchange environment is crucial for its continued economic growth and development. The SAFE’s proactive approach, encompassing both macro-prudential and micro-supervision strategies, coupled with its commitment to a high-pressure crackdown on illegal activities, demonstrates its dedication to safeguarding financial stability in the face of evolving global economic challenges.
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