View of the headquarters of the People's Bank of China, China's central bank, in Beijing, Jan 12, 2017. [Photo/VCG]

The People's Bank of China, the country's central bank, recently announced it had established a committee to study the impact of financial technology on monetary policy, the financial markets, and payment and clearing mechanisms, saying fintech has injected new vitality into financial services, but also brought new challenges.

The boom in fintech through the application of the mobile internet, big data, cloud computing and artificial intelligence has brought many seismic changes to the traditional financial sector. No matter whether traditional financial institutions are willing to get onboard or not, they cannot stop or reverse the fintech trend.

China is an initiator and also a promoter of fintech. The PBOC was the first central bank to hold a symposium on digital currency and the first to turn its attention to blockchain technology and exercise regulations on bitcoin trading.

The recent establishment of a fintech committee once again marks a substantial step by the PBOC toward strengthening regulations over the booming industry as a precaution against possible risks.

However, compared with the United States, it still lags far behind. The authorities should avoid laying obstacles in the way of financial innovations with tightened regulations.

Instead, the newfound fintech committee under China's central bank should fulfill its responsibilities to promote, encourage and support fintech innovations.

Targeted regulatory measures should be applied only after the risks brought about by new technologies reach a certain level and the intensity of regulations should be proportionate to the magnitude of the emerging risks.

Regulators should understand new financial technologies as well as their accompanying risks and opportunities. They should not be afraid to cooperate with financial institutions and even fintech companies. Financial innovation should be given enough time and space, and even a chance for trial and error.

--Beijing Youth Daily