China’s financial sector has been hit hard by a wave of fraud targeting airline operators, with some banks reporting they were targeted more than twice as much as other sectors.
In an unprecedented move, the Central Bank of China announced Monday that it would begin imposing a maximum 10 percent capital limit on the financial sector and that it will step up the measures.
The move follows a crackdown on fraudulent activities by the state-run National Development and Reform Commission.
While regulators have taken steps to curb the fraud in the financial industry in recent months, the new rules are likely to have a significant impact on the sector’s performance.
The financial industry, including China’s state-owned banking system, accounts for almost half of China’s $US11 trillion ($14 trillion) gross domestic product.
The Chinese government has taken a tough stance on fraud in recent years, saying it will not tolerate any kind of financial misconduct in the public or private sectors.
The country’s financial system has seen its stock prices decline by more than 50 percent since mid-2015, and analysts expect the sector to fall further this year as the economy struggles.
The central bank’s decision to introduce a 10 percent cap on the total capital of all financial institutions is expected to boost overall performance by increasing the share of financial institutions that can be nationalized.
But analysts say it could also hinder the development of financial technology, and some fear the new restrictions could drive up the cost of the sector.
China’s financial institutions are the backbone of the country’s economy and make up more than 40 percent of its total GDP.
Many banks have long been the backbone for China’s economy, providing the country with a safe haven and access to credit, and have been the major source of foreign direct investment in China.
The banking sector has struggled to stay afloat during the global financial crisis, as regulators have struggled to rein in financial misconduct and allow banks to provide a more transparent and transparent system.
But the sector has seen a string of high-profile breaches in recent weeks, including one involving the collapse of the world’s largest money transfer platform in February.
That incident exposed a gaping security flaw in the platform’s software, which allowed hackers to steal $US2.6 billion ($3.7 billion) in transactions from banks around the world.