The 2022 government work report clearly mentioned the need to "set up a financial stability guarantee fund". So why set up this fund when some financial industries have set up their own guarantee funds? What will be its mode of operation and economic impact?
Pay attention to risk prevention and set up a guarantee fund. Since the second half of last year, the risks of leading real estate enterprises have been exposed one after another, adding to the unstable factors of the external environment. The prevention and resolution of financial risks has been paid more attention by the policy again. The 2022 government work report proposed for the first time to "establish a financial stability guarantee fund". Internationally, the establishment of financial stability guarantee fund is a common practice for some developed economies to deal with financial risks. From the perspective of China, China has also successively established a variety of sub industry guarantee funds in the financial field, which has accumulated some experience in risk prevention, resolution and disposal in subdivided fields.
Where to raise funds to deal with hidden dangers in the system? The disposal scope is different, focusing on the hidden dangers of the system. The difference between financial stability guarantee fund and industry guarantee fund lies in the scope of risk disposal. The former is mainly the reserve fund for major risk disposal, which is complementary to China's existing industry guarantee fund. It is to add a layer of "bottom-up" protection on the framework of the existing risk disposal mechanism, which should not be used easily, and it is expected to be relatively backward in the order of use. Make it clear that the central bank takes the lead and other ministries and commissions cooperate. In terms of departmental operation, it is clear that the financial stability guarantee fund will be led by the central bank and coordinated by other ministries and commissions. From overseas experience, the management institutions of most financial stability guarantee funds are different from those established. We expect that China may also adopt the form of establishing a Council or corporate system. In terms of capital sources, the financial stability fund mainly comes from three sources: first, financial institutions pay funds in the form of "living will"; Second, direct injection of financial funds or issuance of government bonds; Third, the disposed financial institutions return the funds after the crisis. Take it from the market and charge differently. The operation probability of our guarantee fund will be funded by financial institutions in a certain proportion, and the payment proportion may take the form of risk differential rate. The investment scope has high liquidity and security requirements. From overseas practical experience, the balance of the financial stability guarantee fund is limited to bank deposits or investment in assets with high security and liquidity. The situation of China's existing industry guarantee funds is similar. Therefore, we expect that the investment of China's financial stability guarantee fund will also focus on assets with high security and liquidity. In terms of the use of funds, the financial stability guarantee fund may be mainly used for the risk disposal of financial institutions (including banks and non bank institutions). The financial stability guarantee funds of various countries are mainly targeted at banks, and the American orderly clearing fund (OLF) also includes assistance to non bank financial institutions. It is expected that the rescue objects of China's financial stability guarantee fund are similar to OLF. There are four types of risk disposal methods, and the best shall be considered in combination with the actual situation. The market-oriented risk disposal in developed countries can be roughly divided into four categories: first, bankruptcy liquidation; Second, acquisition and undertaking; Third, the bridge bank will undertake the business of the problem institution and continue to operate and manage it; Fourth, continuing operation assistance. We expect that the risk disposal of China's financial stability guarantee fund is expected to be based on the principles of cost minimization and marketization, and the best of the above methods will be considered, among which the frequency of bankruptcy liquidation and acquisition may be higher.
Improve the guarantee capacity and reduce the dependence of the government. Due to the small scale of the industry guarantee fund and the increasing complexity of financial institutions, there may be a shortage of funds in the process of risk disposal. The financial stability guarantee fund will effectively solve the problem of capital source and ensure the timely disposal of risks. In addition, the establishment of the financial stability guarantee fund has transformed the risk resolution from government assistance to more market-oriented and legal methods, that is, market-oriented funds rank ahead of public funds, reduce the dependence on government financial assistance, and minimize the disposal cost.
Risk tip: policy changes, economic recovery is less than expected.
