A more complex setup for China’s financial regulatory system is emerging, which is required to oversee the cross-market business of inflated financial groups by making professional and effective decisions, emphasizing the core role of the central bank in the restructured financial regulatory framework.

The above views came from research articles published during the weekend by Xu Zhong, head of the research institution of the People’s Bank of China, the central bank.

Those articles are seen as the first draft, issued by the top financial authority, for the country’s upcoming plan to rebuild the criticized existing financial regulatory system that currently leaves loopholes for financial instability.

Xu described the ideal financial regulatory framework as a “matrix”: on the vertical line from top to bottom, with the cabinet-level Financial Stability and Development Committee at the top, while retaining the existing structure of one central bank supported by three special regulatory committees for banking, securities and insurance, and a foreign exchange regulator－the State Administration of Foreign Exchange.

Horizontally, several specialized committees may be launched to coordinate with different supervisory functions and provide professional suggestions for policymakers.

The central bank official said that some unprofessional bailout measures which came from the ineffective multilevel bureaucracy of the regulatory system, led to unexpected market expectation during the stock market turbulence in August 2015, and had an adverse impact on market liquidity and investor confidence.

“In the current situation with highly frequent financial chaos, the central bank’s role to lead the regulatory work, beyond just being a coordinator, should be further strengthened,” said Xu.

Huang Yiping, a member of the central bank’s monetary policy committee, said that a clearer picture of the new framework is expected to emerge soon after the seven-day Lunar New Year holidays and more policies could be released around the “two sessions”－the annual sessions of the National People’s Congress and National Committee of the Chinese People’s Political Consultative Conference starting on March 3.

A final version of the more strict regulations on wealth management products－a major part of the country’s shadow banking business and with a total volume of 29.5 trillion yuan ($4.66 trillion) at the end of 2017 equivalent to around 36 percent of GDP, is expected to officially be released soon even before the “two sessions”, experts said.

They thought that might be the first result or a trial of the new regulatory scheme after coordination with watchdogs for different financial sectors.

To control financial leverage and further tighten regulation will remain the theme in 2018, said Zhao Yang, an economist from Nomura Securities, including reducing corporate debt ratio, reining in the rise of household leverage, bringing down interbank investment, and strictly regulating cross-market financial products.

“We continue to believe that deleveraging will likely be a multiyear process”, said Zhao, who acknowledged that the tighter regulation last year was successful in curbing deleveraging as the expansion of wealth management products slowed and the country’s debt-to-GDP ratio, while continuing to rise in 2017, also did so at a much slower pace.