China’s central bank official questioned amid anti-corruption drive

(Bloomberg) – The Communist Party’s anti-corruption watchdog says it is investigating a former senior Chinese central bank official, the latest move in a crackdown on corruption in the financial sector.

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Sun Guofeng, who was removed from his post as head of the monetary policy department in May, is being investigated for “suspecting a serious violation of laws and discipline”, the Central Banking Commission said on Wednesday. discipline check in a statement.

He did not provide specific details about the alleged breach, but some media outlets have suggested that Sun was involved in using inside information to profit from market trading.

The People’s Bank of China did not immediately respond to faxed questions from Bloomberg News seeking further details. Financial News, a PBOC-affiliated newspaper, reported on Wednesday that Zou Lan, who was in charge of the financial markets department, replaced Sun.

At least 40 financial sector officials have been investigated or sanctioned since the latest crackdown on corruption in the sector began in October. The PBOC was sharply criticized by the disciplinary watchdog in February, along with more than two dozen financial regulators, state banks, insurers and bad debt managers, for failing to meet Party goals. Communist.

Sun joined the PBOC in 1996 and has spent most of his career in the monetary policy department. He was at the forefront of transforming the PBOC into a modern central bank over the years and took part in many milestones including the establishment of the interbank bond market, the launch of open market operations , the establishment of the yuan exchange rate formation mechanism. , and more recently, the overhaul of interest rates.

The Wall Street Journal reported that Sun’s investigation centered on whether he leaked macro indicators to individual bond traders at certain institutions in exchange for personal gain, citing unidentified people with knowledge of the matter.

WeNews, owned by Caixin Media Co., also reported that the investigation may determine whether Sun was seeking personal gain by participating in exchanges and sharing insider information, according to unidentified people.

Bond Futures

WeNews cited a 2021 article written by Sun Tianqi, head of the PBOC’s Financial Stability Office, that some people in key positions sought personal gain through their ability to obtain key economic data ahead of official release. . Traders from some large institutions manipulate the government bond futures market, which often sees big swings one to two minutes before the release of the consumer price index, Sun Tianqi said in his March 2021 article. .

Caixin reported that Sun Guofeng was informed of his dismissal from his post and the investigation when he arrived at the PBOC offices on Wednesday morning, according to unidentified people. His wife, who worked at China Central Depository & Clearing Co., was also taken in for investigation the same day, Caixin said in the report.

WeNews said Sun was flagged by PBOC staff last year about his work arrangement for his wife and “personal lifestyle issues.”

Born in 1972, Sun holds a doctorate in economics from the Chinese Academy of Social Sciences. He is a prolific writer, having published over 100 academic articles and two books in English on China’s monetary policy and financial reforms. His last public appearance was in mid-April, when he attended a quarterly PBOC press briefing.

In a February statement, the CCDI said the central bank’s guidance to financial institutions fell short of expectations and that it still needed to do more to address funding issues for private businesses and small businesses. PBOC Governor Yi Gang said at the time that the central bank would correct its mistakes and strengthen its macroeconomic policies and financial regulation.

(Updates with additional details from news reports.)

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