Zhongxin Finance, April 6th, according to the official account of the central bank, in order to implement the decisions and arrangements of the CPC Central Committee and the State Council on preventing and defusing financial risks, improving the financial rule of law, and establishing a long-term mechanism for maintaining financial stability, the People's Bank of China, together with relevant departments, conduct in-depth research. , repeatedly argued, and drafted the "Financial Stability Law of the People's Republic of China (Draft for Comment)", which is now open to the public for comments.
The drafting instructions for the "Financial Stability Law of the People's Republic of China (Draft for Comment)" show that the "Financial Stability Law" has six chapters and forty-eight articles, which are divided into general provisions, financial risk prevention, financial risk resolution, financial risk disposal, legal responsibility and supplementary provisions. The main contents include:
(1) Improve the financial stability working mechanism.
The Financial Stability Law stipulates that the National Financial Stability and Development Coordination Mechanism (Financial Commission of the State Council) shall coordinate financial stability and reform and development, direct and carry out the prevention, resolution and disposal of major financial risks, and major matters shall be submitted for approval in accordance with procedures.
Relevant departments and localities shall, in accordance with the division of responsibilities and the requirements of the Finance Committee, perform their duties of preventing, resolving, and disposing of financial risks in accordance with the law, and closely coordinate and cooperate to form a joint effort.
Deposit insurance fund management institutions and industry security fund management institutions shall perform their duties in accordance with the law, and play the role of market-oriented and law-based disposal platforms.
(2) Consolidate the responsibilities of all parties for financial risk prevention, resolution and disposal.
Preliminary disposal practice shows that some small and medium-sized financial institutions have failed corporate governance, extensive business models, and some shareholders and actual controllers abuse their control rights and illegally occupy financial institutions’ funds. These are the important reasons for the occurrence of financial risks. The supervisory responsibilities of financial supervisory authorities also need to be further implemented and strengthened.
The Financial Stability Law consolidates the main responsibilities of financial institutions and their major shareholders and actual controllers, strengthens financial institutions' prudential operation obligations, and strengthens access and regulatory requirements for major shareholders and actual controllers.
Consolidate the territorial and stability maintenance responsibilities of local governments, and proactively resolve regional financial risks in a timely manner.
Consolidate the regulatory responsibilities of the financial regulatory authorities, earnestly perform the financial risk prevention and control responsibilities in the industry, and strictly prevent, correct and deal with risks in a timely manner.
The People's Bank of China plays the role of the lender of last resort and maintains the bottom line of preventing systemic financial risks.
(3) Establish a disposal fund pool, clarifying the matching of rights, responsibilities and interests, and a fair and orderly disposal fund arrangement.
Dealing with financial risks requires investment of financial resources.
Since 2008, international organizations and major economies have emphasized that to deal with risks, financial institutions must first self-bail out and then take external assistance to reduce dependence on public funds.
The "Financial Stability Law" adheres to the above principles. First, the disposed institutions are required to actively rescue themselves and mitigate risks. The major shareholders and actual controllers replenish capital in accordance with the recovery and disposal plan or regulatory commitments, and shareholders and actual controllers who are responsible for financial risks shall perform their duties in accordance with the law. duty of self-help.
At the same time, mobilize market-oriented funds to participate in the merger, acquisition and reorganization of disposed institutions, and give play to the role of deposit insurance funds and industry security funds as a market-oriented and law-based disposal platform.
If regional stability is endangered, and it is still difficult to resolve the risk after exhausting market-oriented means and strictly implementing the recovery of assets and losses, the local public resources shall be used in accordance with the law; if major financial risks endanger financial stability, the financial stability guarantee fund shall be used in accordance with regulations to effectively prevent moral hazard, seriously market discipline.
(4) Establish a financial stability guarantee fund.
In order to improve my country's financial safety net and enhance my country's ability to deal with major financial risks, the "Financial Stability Law" clearly establishes a financial stability guarantee fund as a reserve fund for the country's disposal of major financial risks.
Drawing on common international practices, the fund consists of funds raised from financial institutions, financial infrastructure and other entities, as well as other funds specified by the State Council.
When necessary, public funds such as re-loans from the People's Bank of China can provide liquidity support for the fund, and the fund shall repay the re-loans with disposal proceeds, proceeds and industry charges.
At the same time, it is clear that the State Council stipulates the specific methods for the raising, management and use of the financial stability guarantee fund, leaving institutional space for further exerting the role of the financial stability guarantee fund in the future.
The Financial Stability Guarantee Fund and the existing deposit insurance fund and industry guarantee fund operate in two layers and cooperate with each other to further strengthen my country's financial safety net.
(5) Establish a market-based and legal-based risk disposal mechanism.
Dealing with financial risks requires abiding by the spirit of the contract, fair protection of the legitimate rights and interests of all parties, and strict market discipline.
According to the actual needs of disposal and with reference to international practices, the Financial Stability Law adds new disposal tools such as the overall transfer of assets and liabilities, the establishment of bridge banks and special purpose vehicles, and the suspension and termination of net settlement.
In accordance with the principle of marketization and rule of law, it is clarified that the disposal institutions can implement equity, debt write-down and debt-to-equity swaps in accordance with the law, and share disposal costs.
The order of write-down of equity and creditor's rights shall be clarified, the legitimate rights and interests of shareholders, creditors and relevant stakeholders shall be protected, and it shall be clarified that the income of creditors and relevant stakeholders through risk disposal shall not be lower than the income from bankruptcy liquidation.
Improve the arrangement of supporting systems for disposal, and maintain connection with judicial procedures.
(6) Strengthen accountability for violations of laws and regulations.
Clearly hold accountability for violations of laws and regulations that lead to the occurrence and spread of financial risks, and pursue legal responsibilities in accordance with the law.
It is stipulated that financial institutions and their major shareholders and actual controllers violate laws and regulations in the formation and disposal of financial risks and their corresponding penalties. If a crime is constituted, criminal responsibility shall be investigated according to law.
The dereliction of duty by public officials shall be dealt with in accordance with the law, and if it constitutes a crime such as abuse of power or dereliction of duty, criminal responsibility shall be investigated according to law.
In the next step, the People's Bank of China will work with relevant departments to adhere to scientific, democratic and law-based legislation, fully absorb comments and suggestions from all walks of life, further revise and improve the draft "Financial Stability Law", and cooperate with the legislature to advance follow-up work with high quality in accordance with legislative procedures. Promote the early introduction of the Financial Stability Act.
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