Wild East has its advantages
2016-06-01 14:33阅读：
Wild East has its advantages: Over-regulation kills financial
innovation
- Joe Zhang chats with Lendit's Dr. Tharon about fintech, P2P
and regulation around the globe
Dr. Tharon: Joe, how do you see fintech's growth in
the next few years?
Joe Zhang: In the West, fintech in general and P2P in
particular face an almost-insurmountable challenge:
over-regulation. Since the 2008 subprime crisis, Western regulators
are competing to be the toughest cop in the room.
Dr. Tharon: What about China?
Zhang: China's regulatory regime for fintech is
simply the best in the world, in my view. I mean it. Call it the
'Wild East' if you will but, for the most part, Beijing wants the
free market to regulate itself. Coded regulation is often vague and
loosely enforced. This makes perfect sense for fintech, a new
industry in a developing country. I often say, fly-by-night
me
rchants must be allowed to roam the street. Ridiculous ideas and
crazy business models must be allowed to see the light of day. Many
citizens have lost money to unscrupulous P2P operators and 'wealth
managers'. But so what? The amount of money they have lost in the
stock market is hundreds and even thousands of times bigger. But
will that stop them from piling into the next hot stock tip in a
fit of stock market mania? Surely not! So let Ponzi schemes
flourish. Losing money is the best financial education a person can
receive. One learns from one's mistakes. We need it.
Dr Tharon: 'Fool me once, shame on you. Fool me twice,
shame on me!'
Zhang: Precisely. The governments must treat adult
citizens as adults, first and foremost. There are fools in the
crowd, but there are many more who are not fools. Many take the
plunge into P2P and even Ponzi schemes with their eyes wide open.
There are plenty of warnings, red flags, and cautionary tales
around. But the minute the people lose money to a scam, they point
fingers at the regulators, 'it is all your fault!' Is that
fair?
Dr Tharon: I hear that hundreds of P2P operators have
shut down. How do you see that?
Zhang: Apart from a few, most of these operators have
collapsed due to the 'gravity' in the market, and without the
regulators having to fire a single shot. The operators could not
continue to lie. Unfortunately, many honest P2P operators and
wealth managers have also failed, either because their business
models were inherently flawed, or because they were poorly run. But
on the whole, all these operators (including the crooks) have made
a valuable contribution to society by fostering competition, and
improved consumer welfare. We must thank them all.
Dr Tharon: Will the citizens in China, like those in
the West, demand tighter regulation?
Zhang: Sure. But the so-called invisible hand of the
market is the best regulator. Tight regulation hinders innovation,
and harms competition. Moreover, adults must take responsibility
for her own financial behaviour. In the West, the regulators have
deprived consenting adults of financial thrills and the ability to
take a risk with one's own money.
Dr. Tharon: You mean that the regulators should turn a
blind eye on crooks?
Zhang: Absolutely. Crooks are a part of our financial
eco-system. Over-regulation leads to many unintended consequences.
Think about it: from the regulation of drugs and abortion to
minimum wages and food prices, the governments around the world
have done far more damage than good, despite decades of wasteful
efforts and so much money spent. By the same token, official
controls on interest rates and currency values have also proven to
be hurtful to the very people they are designed to
protect.
Dr. Tharon: You must come to the next Lendit
conference to share your views.
Zhang: Delighted.
