News from Beijing Business Today (journalist Yan Jin and Liu Shuangxia) Attention has been paid to the risks of digital finance segmented formats and supervision level is discussing feasible supervision measures. On July 18, Huang Yiping, the member of the Monetary Policy Commission of the People’s Bank of China and vice president of National School of Development at Peking University said when having an interview that “digital finance can be supervised by referring to the foreign practice and by implementing “supervision sandbox plan” or innovation center; for example, one restricted license can be issued or an interval can be divided to make active attempts; if they are committed to the rules, one restriction-free license can be granted; or their license can also be cancelled if they break their commitment".

Digital finance was actually originated from internet finance. According to the introduction of Xue Hongyan, the senior research fellow of Suning Institute of Finance, digital finance was actually the official name made to internet finance and other emerging formats. In light of the face that internet finance was ever in chaos and is under centralized control, the concept of digital finance becomes more neutral and therefore has better extensionality; besides all internet finance formats, it can also cover financial technology partially.

The concept of digital finance was officially proposed in Hangzhou G20 in 2016. One significant result brought by G20 is that the “international convention” of Digital Financial Inclusion-G20 High-Level Principles for Digital Financial Inclusion was deliberated and approved; it is generally called the action guide of global digital financial inclusion by the industry.

The meaning of digital finance was ever described more vividly by someone who believed that the internet finance era was not a real digital finance era and the current integration of big data and internet finance was just the activity before a real digital finance era came. Digital finance was said to include such financial services mainly as digital currency, internet payment, mobile payment, online bank, finance service outsourcing, online insurance and online securities trading.

Risks of some emerging digital finance formats appear gradually but they have not been included in the scope of supervision. Taking digital currency field as an example, the sudden rise and slump of digital currency made the investors suffer capital loss very seriously and more seriously, various pyramid selling organizations claming “virtual currency", “mutual-help finance” and “equity” on the market cheated others in virtue of the concept of digital finance. Huang Yiping pointed out that the current domestic financial system still had many problems and the field that could be hardly supervised included shadow banking, digital finance and financing of local government. In particular, digital financial platform had a very critical risk characteristic: all participants were weak in recognizing and bearing risks generally; risks transmitted very fast and in different industries and even among different regions.

When talking about supervision, Huang Yiping believed that the supervision of digital finance could not go to extremes. It meat that supervision could not be made, either utterly, or to go freely. In principle, it is possible to strike the balance between the innovative development of digital finance and risk prevention.

Huang believed that the digital finance and traditional finance shall be subject to the unified supervision framework and standard. Arbitrage easily happened if they applied to different supervision standards, which finally led to risk hidden dangers. Pan Gongsheng, the vice president of the People’s Bank of China also said in the forum of the 3^rd World Internet Conference that new digital finance supervision system, cautious supervision system and market admission system should be established and identical supervision standard should be used for the products the nature of which were the same, instead of being affected by the organization nature of the product provider.

As for the supervision of digital finance segmented formats, Xue Hongyan said that license had been issued to the third party payment industry; although online loan industry had not been controlled by license, relatively high admission threshold had been set by referring to the license requirements. Besides, consumer finance had also been under the license control indirectly via such organizations as private banks, small loan companies, consumer finance companies and factoring companies.

“After all, the several kinds above are relatively mature ones but for ICO, DGC, block chain, big data and other emerging formats, restricted license can be issued in a way based on sandbox test for supervision, for the purpose of balancing safety and efficiency", added by Xue Hongyan.