An employee counts yuan banknotes at a bank in Huaibei, Anhui province, June 22, 2010. [Photo/Agencies]

The central government announced its decision to set up the new regulatory body at the National Financial Work Conference in mid-July.

Vice-Premier Ma Kai, who heads the new committee, said at Wednesday's meeting that the financial system should unswervingly carry out the policies laid out at the 19th National Congress of the Communist Party of China last month, according to a report by Xinhua News Agency.

At the meeting, the committee approved a list of primary tasks it will carry out in the short term and stressed that the main economic regulatory philosophy of maintaining stability while seeking progress will be followed, the report said.

China will stick to its prudent monetary policy, strengthen financial regulatory coordination, improve its ability to handle risks, better guide the financial system to serve the real economy and safeguard national financial security, the report said.

Lian Ping, chief economist at Bank of Communications, said the committee will overcome the shortcomings of the existing financial regulatory framework.

"It will play an important role" in deepening financial reform "and strengthening coordination and regulation", Lian said.

China has adopted a de facto separate financial regulatory regime, with regulators focusing on supervision in their own fields. However, this has been criticized as being responsible for the country's worsening shadow banking problem in recent years.

Shadow banking refers to nonbank financial intermediaries that provide services similar to traditional commercial banks but operate outside normal financial regulations, creating financial risks.

The creation of the committee marks the first step in China's mixed operation-based financial regulation and closes the loopholes in the traditional regulatory system, said Jiang Chao, a senior economist at Haitong Securities.

"It will deal a heavy blow to shadow banking," Jiang said.