Event description:
On April 6, the people's Bank of China issued the financial stability law of the people's Republic of China (Draft for comments) (hereinafter referred to as the "draft") and solicited opinions from the public.
Drafting background:
System first and plan ahead. The introduction of the draft is the overall design of the legal system for financial stability and the overall arrangement of cross industry and cross department. It is an institutional norm for important issues in the financial field and is of great significance for preventing and resolving financial risks. Previously, the financial stability and Development Commission, as the main body of overall coordination in dealing with financial risks, has formed a lot of effective experience and practices in the battle against major financial risks. The introduction of the draft will help improve the long-term mechanism for maintaining financial stability and effectively maintain national economic and financial security and social stability. At the same time, in recent years, major developed economies have generally introduced special legislation. For example, the United States and the United Kingdom have introduced the Dodd Frank act and the banking act respectively to build a unified and coordinated institutional framework for financial stability. The introduction of the financial stability act in China is also an effective exploration to absorb the experience and lessons in the field of financial risks in China and internationally.
Main contents:
The draft consists of six chapters and 48 articles, which are divided into general provisions, financial risk prevention, financial risk resolution, financial risk disposal, legal liability and supplementary provisions.
The draft aims to establish and improve an efficient, authoritative and coordinated financial stability working mechanism, and further consolidate the main responsibilities of financial institutions and their major shareholders and actual controllers, the territorial responsibilities of local governments and the supervision responsibilities of financial supervision departments; Strengthen financial risk prevention and early correction, and realize early detection and early intervention of risks; Establish a market-oriented and legal disposal mechanism, clarify the source and use arrangement of disposal funds, improve disposal measures and tools, and protect the legitimate rights and interests of market subjects; Strengthen the accountability for violations of laws and regulations, so as to further strengthen the financial safety net and firmly hold the bottom line of no systemic financial risk.
Financial institutions should operate with licenses. The draft stipulates that no unit or individual shall establish a financial institution or engage in or engage in financial activities in a disguised form without approval. It is expressly prohibited for some institutions to engage in financial activities in violation of regulations or in a disguised form without applying for a license from the regulator.
Strengthen the management of shareholders of financial institutions. The draft points out that financial institutions should strengthen the construction of corporate governance and internal control mechanism, prevent manipulation by major shareholders and insider control, and put forward requirements for the access of major shareholders. Major shareholders should contribute with their own funds and have good capital strength, financial status and integrity records.
Clarify the responsibilities of all parties and form a joint regulatory force. Consolidate the main responsibilities of financial institutions and their major shareholders and actual controllers, and strengthen the obligation of prudent operation of financial institutions; Consolidate the territorial and stability maintenance responsibilities of local governments, and take the initiative to resolve regional financial risks in a timely manner; Consolidate the supervision responsibility of the financial supervision department and earnestly perform the responsibility of financial risk prevention and control in this industry and field; The territorial responsibility of local governments and the supervision responsibility of financial supervision departments were further implemented and strengthened.
Establish a financial stability guarantee fund as a reserve fund. The draft establishes a disposal fund pool, which makes it clear that the disposal of risks should be self-help by financial institutions first, and then take external assistance. At the same time, mobilize market-oriented funds to participate in the merger and reorganization of the institution under resolution. If major financial risks endanger financial stability, the financial stability guarantee fund shall be used in accordance with the regulations. The source of financial stability guarantee funds is composed of funds raised from financial institutions, financial infrastructure and other entities and other funds specified by the State Council. As a reserve fund to deal with major risks, it is under the overall management of the financial commission of the State Council. Represented by the orderly clearing fund of the United States and the single disposal fund of the European Union, major developed economies have also established financial stability guarantee funds with similar functions.
Content interpretation:
Improve the top-level design and maintain financial stability. From the perspective of global financial supervision, all countries are moving towards macro counter cyclical regulation and micro market-oriented supervision. At present, China has basic laws such as the people's Bank of China law, the commercial bank law, the securities law and the insurance law. The draft focuses on risk prevention and institutionalized disposal, ensuring financial security at a higher level. Because the financial risk spillover effect is very obvious, it affects the whole body, and is closely related to the real economy. Previously, the financial risks of some financial institutions had a great impact on the economy and society. In recent years, equity management measures have been successively introduced in banking, securities, insurance and other financial sub fields, and the supervision of financial groups has also been continuously strengthened, which come down in one continuous line. In the context of the complex international environment and the uneven recovery of China's macro-economy, the hidden dangers of financial risks still exist. As the top-level design of the financial stability system, the financial stability law is conducive to the stable development of financial institutions, improve the unified and coordinated financial risk prevention, control and disposal mechanism, and effectively maintain financial security and stability.
In the form of institutionalization and legalization, we should weave a dense financial stability network. This is the heaviest change since the establishment of the financial committee at the fifth national financial conference in 2017, which will profoundly change the regulatory pattern of the financial industry. From October 19, 2018 and March 16, 2022, the two voices of the financial commission, the positive response of the capital market, and the important role of the financial commission in financial supervision are self-evident. It is beneficial to establish a long-term financial risk prevention mechanism in the early stage and establish a long-term financial risk prevention mechanism in the form of pre event and post event. It is conducive to the formation of a solid financial risk prevention mechanism and the formation of a long-term risk prevention mechanism.
Risk warning: the secondary market has fallen sharply; The policy promotion was less than expected.
