BEIJING -- China's central bank has set up an institution to improve financial regulation and risk prevention, the office of public sectors reform commission said in a statement Saturday.

The People's Bank of China (PBOC) has established a macro-prudential management bureau to replace the previous foreign exchange department, according to the statement.

The bureau will be responsible to formulate macro-prudential policies, assess financial agencies, draft rules and regulations, and monitor financial risks.

It will also shoulder foreign exchange department duties, such as assessing foreign exchange policies and promoting the yuan's cross-border transactions.

Establishing the bureau is a crucial measure in the country's strategy of building a two-pillar framework consisting of monetary policy and macro-prudential assessment, said Yin Zhentao, a researcher with the Chinese Academy of Social Sciences.

The bureau will further consolidate the PBOC's role in financial regulation, Yin said.

The statement also mentioned the PBOC would adjust the duties of its departments and personnel to enhance efficiency and service quality.

Established in 1948, the PBOC is China's central bank and plays a significant role in China's macroeconomic management.

Major functions of the central bank include drafting laws and regulations, formulating and implementing monetary policy, issuing currency, regulating financial markets and safeguarding financial stability.