* Innovation boosts banks' competitiveness, fuel
* Measures could include higher provisions, capital
(Adds details, quotes)
BEIJING, March 24 China will encourage financial
innovation and will control potential risks arising from the
process, Wang Zhaoxing, vice chairman of the China Banking
Regulatory Commission (CBRC), told a forum in Beijing on Friday.
"In the context of putting more emphasis on defence against
financial risks, we should continue to vigorously promote
financial innovation," Wang said, according to a transcript of
"We should ensure that risks from innovation for financial
institutions are under control."
Measures to control risks could include higher provisions
and capital requirements for financial institutions, he said.
China's financial innovation in recent years has supported
the real economy and boosted banks' competitiveness, but "there
have been a lot of financial risks and chaos that could bring
about an impact and even threat to the safety and stability of
the banking system", he said.
China's financial innovation, including capital market
tools, securitisation and internet finance, has led to rapid
growth of shadow banking activities, he added.
The banking regulator will strengthen its coordination and
information sharing with securities and insurance regulators, as
well as the central bank to help curb risks, Wang said.
(Reporting by Kevin Yao and Beijing Monitoring Desk; Editing by