Chen Yunxian, vice-governor of Guangdong province, gave a lecture on US financial regulation and its implications to China at Guangdong University of Foreign Studies on Wednesday.

He made five suggestions to the central government about maintaining the development and stability of China's economy, based on his experience in banking and securities and his research on the topic during a six-week study at Yale University in the US this year.

Chen said the Great Recession in the US in 2007 and 2008 was partly caused by the boom of financial innovations stimulated by merging businesses.

"These developments made the financial market harder to monitor, and the credit boom and excessive risk-taking behaviors led to the financial crisis," Chen said.

He advised the central government to keep the commercial banking, investment banking and insurance sectors separated.

"The central government should also grant more authority to the People's Bank of China, giving it new authority in monitoring and interfering the banking, securities and insurance sectors besides money supply, liquidity supply and foreign reserves," Chen said.

To prevent abuses of power, Chen advised the central government to establish a financial stability oversight council under the State Council.

He also proposed that China establish a deposit insurance company, as an answer to the Federal Deposit Insurance Company in the US.

Chen said he hopes the internationalization of the yuan can be achieved and pointed out that China should take the lead in establishing the Asian Monetary Fund.

Chen is in charge of Guangdong province's financial development. He previously was vice-president of China Guangfa Bank and president of Guangfa Securities Co Ltd.