Jack Ma, the Chinese language billionaire behind Alibaba Group Holding Ltd., identified the shortage of a wholesome monetary system in China and urged the reform of economic rules in a speech Saturday.
Ma made the remarks on the second Bund Finance Summit in Shanghai, an occasion attended by a whole lot of bankers and regulators.
In his observations, in contrast to Europe, the place the monetary system has been working for many years, China is just not going through a monetary systemic threat, however a threat that “still lacks a healthy financial system.”
He additionally questioned whether or not Basel Accords are appropriate for China. “Europe needs the Basel Agreement to solve the over-complex and aging system problems, but China’s financial industry is still in its youth without a mature ecosystem.”
After talking for awhile, Ma talked about the twin itemizing for Chinese language fintech large Ant Group. “It’s the first time that the pricing of such a big listing – the largest in human history – has been determined outside New York City.”
He mentioned the share value had been selected Friday however didn’t disclose the determine, and Ant’s providing was a “miracle.”
“We didn’t dare to think about it five years ago, or even three years ago. But a miracle just occurred.”
Ma additionally mentioned China’s monetary system wants different technology-driven channels in an unlimited financial system because it’s nonetheless dominated by state banks.
“Big banks are like big rivers and aortas of blood, but we also need lakes, ponds, and creeks.”
Ma mentioned the standard banking enterprise in China is just like pawn outlets as they each demand collateral and ensures earlier than lending.
“The system of relying on assets and mortgages will go to two extremes,” Ma mentioned. “The concept of pawnshops is the most serious in China. Either enterprises’ assets are fully pledged and they take huge pressure, or they unscrupulously borrow money and continuously increase leverage, causing huge debts.”
He mentioned the pawnshop mentality can not help the monetary wants of the world’s growth within the subsequent 30 years. And other people should use in the present day’s expertise to interchange the pawnshop mentality with a credit score system based mostly on large knowledge.
“In the future, it would need an inclusive, sustainable and green system that uses new technologies such as big data, cloud computing as well as blockchain.”
Ma additionally mentioned there are too many controls within the monetary rules.
“Today, there are too many documents that don’t allow you to do something but too few supportive policies coming out. I am most afraid that after such supervision, risks disappear and relative department risks disappear, but the entire economy is at risk of not developing.”
“Innovation always comes with risks and mistakes … the biggest risk is that you try to minimize the risk to zero,” Ma mentioned.
“Good innovations are not afraid of supervision, but they fear outdated supervision. We cannot manage the airport the same way as the railway station, and we cannot manage the future with the same approach we used yesterday.”
He additionally cited digital foreign money for example, saying it could be an essential core sooner or later world monetary system. “Today’s financial market does not need digital currency, but it needs it tomorrow, the future needs it, and thousands of people need it. We should ask ourselves, what practical problem does digital currency solve in the future?”
“Reform requires sacrifice, and there is a price to pay,” Ma mentioned. “When our generation makes this reform, the result may only be seen by the next generation. We may be the one who is going forward with heavy burdens, but this is the opportunity and responsibility given to us by history,” he mentioned.