| The application of social network analysis method to Internet financial risk analysis reals two social characteristics of Internet financial risks. First, the connection density between multiple nodes has the dual role of decentralizing and reducing financial risks as well as aggravating the accumulation and spread of financial risks. Second, the formation and social amplification of Internet financial risks are constrained by the "embedded relationship network". The financial relationship network established by the Internet leads not only to the complexity, abruptness, rapidness, and extensiveness of the spread of systemic risks of Internet finance, but also to such new forms of expression as "too many connections to collapse" and "too fast to collapse". With the gradual manifestation of the risks and social characteristics of China's new Internet finance industry in its development in the past two decades, the regulatory authorities have responded by stages with three regulatory methods:"tolerant regulation", "regulation in principle" and "campaign-style regulation". The recent regulatory failures have made it clearly that, due to the lack of appropriate data and technology, traditional divided financial regulation system, also known as "PBC and three commissions system", falls far short of curbing the rampant growth of illegal Internet finance and preventing the accumulation and spread of financial risks. As a remedy, a new Internet finance regulation system with advanced regulatory ideas, coordinated and data-sharing regulatory organs, regulatory principles matching underlying risks, and a RegTech arsenal has been proposed. The ongoing reform of the financial regulatory system in China is a big step in the right direction, and RegTech is the most important basis of Internet finance regulation regime. |
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