{"id":5857,"date":"2020-10-26T11:18:15","date_gmt":"2020-10-26T11:18:15","guid":{"rendered":"https:\/\/newmoneyreview.com\/?p=5857"},"modified":"2020-11-06T18:49:35","modified_gmt":"2020-11-06T18:49:35","slug":"china-tech-magnate-slams-global-banking-rules","status":"publish","type":"post","link":"https:\/\/newmoneyreview.com\/index.php\/2020\/10\/26\/china-tech-magnate-slams-global-banking-rules\/","title":{"rendered":"China tech magnate slams global banking rules"},"content":{"rendered":"

Jack Ma, the co-founder and chairman of Chinese technology giant Alibaba, has attacked the Basel regulatory framework for the global banking system, calling it a hindrance to development.<\/p>\n

The Basel rules, first introduced nearly fifty years ago<\/a> at the Bank for International Settlements (BIS), which is based in the northern Swiss city, set minimum capital and liquidity requirements for the world\u2019s banks.<\/p>\n

Confronting the old guard<\/strong><\/p>\n

In a speech made on Saturday in Shanghai, Ma said the Basel standards had been designed by \u201ca club of old people\u201d and were inadequate for today\u2019s digital economy.<\/p>\n

\u201cIf a child takes Alzheimer\u2019s medicine to cure polio, there will be many new problems\u201d<\/p><\/blockquote>\n

Instead, Ma called for a new framework based on big data, cloud computing and blockchain technology.<\/p>\n

\u201cThe symptoms of Alzheimer\u2019s and polio may look similar, but they are two completely different diseases. If a child takes Alzheimer\u2019s medicine to cure polio, there will be many new problems,\u201d South China Morning Post reported Ma as saying<\/a>.<\/p>\n

\u201cThe Basel Accords are intended to treat diseases of an ageing banking system, it is a medicine for old people \u2026 but China\u2019s financial system is still in its youth,\u201d Ma said.<\/p>\n

The Basel rules have been through several iterations since their introduction in 1974<\/a>. Most recently, they were amended following the 2008 financial crisis to create today\u2019s \u2018Basel III\u2019 framework.<\/p>\n

Basel III sets minimum capital requirements for banks, as well as a maximum leverage ratio and a minimum liquidity ratio.<\/p>\n

Speaking out ahead of giant Ant Group IPO<\/strong><\/p>\n

Ma\u2019s comments came ahead of the planned initial public offering (IPO) of Alibaba affiliate Ant Group, which is due to become the largest equity fundraising in history.<\/p>\n

Ant Group plans to list simultaneously in Hong Kong and Shanghai in the coming weeks. The share sale is due to raise up to $35bn, surpassing the record set by Saudi Aramco\u2019s $29.4bn float in December.<\/p>\n

This would value Ant at up to $320bn, making it the world\u2019s highest-valued financial technology (fintech) company.<\/p>\n

The jewel in Ant Group\u2019s crown is the world’s largest mobile and online payments platform, Alipay, which has over one billion users.<\/p>\n

\u201cBig banks are like big rivers \u2026 but we need ponds, creeks and small channels in the system\u201d<\/p><\/blockquote>\n

In his speech, Ma suggested that financial firms should move away from collateral-based lending approach, which he described as relying on a \u201cpawn shop\u201d mentality, and towards a lending model that uses big data and credit records to allocate funds.<\/p>\n

In China, Ant Group uses a social scoring system called Sesame Credit to give users with high ratings collateral-free access to a variety of goods and services.<\/p>\n

Decentralising the financial system<\/strong><\/p>\n

Ma also made a pointed criticism of the bank-centred financial system and suggested it should become more decentralised.<\/p>\n

\u201cBig banks are like big rivers \u2026 but we need ponds, creeks and small channels in the system. Without these in an ecosystem, floods and droughts will always happen here and there,\u201d Ma said.<\/p>\n

In his speech, Ma went on to praise innovations in money, an area where China has been in the vanguard.<\/p>\n

The country is a leader in blockchain technology<\/a> and is on the verge of introducing a new form of state-backed digital currency, which threatens US control of the global financial system<\/a>.<\/p>\n

\u201cDigital currency could create value and we should think about how to establish a new type of financial system through digital currency,\u201d Ma said.<\/p>\n

Sign up here<\/a> for the monthly New Money Review newsletter<\/em><\/p>\n

Click here<\/a> for a full list of episodes of the New Money Review podcast: the future of money in 30 minutes<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Jack Ma, the co-founder and chairman of Chinese technology giant Alibaba, has attacked the Basel regulatory framework for the global banking system, calling it a hindrance to development. 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