* Financial stability committee to be set up under cabinet
* President Xi calls for greater accountability for regulators
* Premier Li says China to maintain prudent monetary policy (Adds context, quotes, details)
BEIJING/SHANGHAI, July 16 (Reuters) - China's central bank will take on a bigger role in macro-prudential management and in averting systemic risk in the financial system, President Xi Jinping said at a once-in-five-years government work conference that ended on Saturday.
Financial security is a vital part of national security, Xi said at the fifth National Financial Work Conference, adding that China will strengthen the Communist Party's leadership in the financial sector.
A Financial Stability and Development Committee will also be set up under the State Council, or cabinet, state media cited Xi as saying.
No details were given on the committee and on how the role of the People's Bank of China (PBOC) will be strengthened.
Fragmented oversight of China's financial sector has led authorities to worry about "giant crocodiles," a term that regulators have started using to describe law-breaking tycoons who circumvent regulations to grab control of other companies.
As a result, funds are illegally spent on buyouts and acquisitions and are not being used by companies to spur growth in the real economy.
Earlier this year, the China Insurance Regulatory Commission (CIRC) banned the chairman of Foresea Life from the insurance business for 10 years, citing violations of rules in the firm's use of insurance funds.
CIRC separately also restricted Evergrande Life's stock trading activities for one year, after accusing the insurance firm of engaging in irregular investment activities.
BLOOD AND PULSE
Finance is the "blood and pulse" of the economy, and it is the sector's "divine vocation" to serve the real economy, the official Xinhua News Agency quoted Xi as saying.
Xi called for greater accountability for financial regulators at the meeting, saying it would be "negligence of duty" if regulators fail to identify risks in time, and it would be "malfeasance" if they fail to report and contain the identified risks.
The main financial regulators include the China Banking Regulatory Commission, the China Securities Regulatory Commission (CSRC) and CIRC.
In 2015, a poorly coordinated response to a stock market crash in China spurred scrutiny on the government's response. Premier Li Keqiang openly criticized financial regulators as not responding sufficiently.
Xi said on Saturday that regulators must share industry data within their jurisdictions and coordinate their financial regulations.
The financial work conference comes ahead of a once-in-five-year congress of the Communist Party in the autumn, where Xi is expected to further consolidate his hold on power.
"Traditionally the (financial) conference is presided by the premier, but this time, not only was the big boss (Xi) there, people from the anti-corruption watchdog and the parliament advisory body were there too," said a person who follows Chinese regulatory developments.
At the conference, Premier Li Keqiang said China will maintain prudent monetary policy and an appropriate credit growth rate while keeping liquidity basically stable.
Xi said Beijing will also strictly control new local government debt and strengthen oversight of internet financing.
"China's plans to ameliorate systemic risk, while laudable, are also significantly driven by the desire for an unblemished 19th Party Congress," said Brock Silvers, managing director of Kaiyuan Capital, a Shanghai-based investment advisory firm.
"Regulators have yet to announce detailed steps, and probably won't do so prior to the Congress," he said. "In the interim I don't expect major changes, such as the creation of a unified super-regulator." (Reporting by Stella Qiu in BEIJING and Adam Jourdan in SHANGHAI; Additional reporting by Benjamin Lim in BEIJING and Engen Tham in SHANGHAI; Additional writing by Ryan Woo; Editing by Dale Hudson and Richard Borsuk)