Consolidate the financial safety net and improve the ability to prevent systemic financial risks

　　Build a financial safety net

　　"Effectively prevent and resolve major economic and financial risks", the Central Economic Work Conference held recently pointed out that it is necessary to prevent and resolve financial risks, consolidate the responsibilities of all parties, and prevent the formation of regional and systemic financial risks.

　　This reflects better overall planning of development and security, better adherence to bottom-line thinking, and better focus on risk prevention and control. Keynote, through the development, especially the promotion of high-quality development, the methodology of solving problems in progress, focusing on fundamentally preventing and defusing risks, and forming a virtuous circle of finance and economy.

Fruitful results in preventing and defusing financial risks

　　Firmly holding the bottom line of preventing systemic financial risks and earnestly maintaining financial stability have become the top priority of my country's financial supervision.

In recent years, in accordance with the basic policy of "stabilizing the overall situation, overall planning and coordination, classified policies, and precise bomb disposal", relevant departments have fought a tough battle to prevent and defuse major financial risks, continued to promote and improve the long-term financial stability mechanism, and effectively responded to complex and severe domestic and foreign situations The impact and test of the new crown epidemic have maintained the overall situation of financial stability and development, and created a safe and stable environment for the sustainable and healthy development of the financial industry.

　　Resolutely deal with high-risk enterprise groups and high-risk financial institutions.

In accordance with the principles of marketization and the rule of law, "precise bomb disposal" will be carried out on high-risk enterprise groups with large assets and liabilities such as the "Tomorrow Group", "Anbang Group", "Huaxin Group", and HNA Group.

Resolutely took over 10 "tomorrow-based" financial institutions, including Baoshang Bank, and all of them have successfully completed the takeover.

Safely dispose of Bank of Jinzhou and promote its reform and reorganization, and timely block the spread of its risks across institutions and markets.

Successfully completed the risk disposal of Hengfeng Bank and other key financial institutions.

Steadily promoted the risk management of Huarong Company, successfully completed the capital increase and promoted the company to focus on the main business and reduce risks.

Support and cooperate with relevant local governments to promote the reform of small and medium-sized financial institutions to reduce risks, and the number of high-risk small and medium-sized financial institutions has generally declined.

　　Effectively reduce shadow banking risks.

In accordance with the requirements of "preventing risks, controlling chaos, and making up for shortcomings", new regulations on asset management and supporting implementation rules have been introduced, regulatory standards for asset management products have been unified, and high-risk shadow banking and cross-cutting financial products have been dismantled.

At the end of June 2022, the net value ratio of asset management products was 87%, an increase of 41 percentage points from the end of 2018.

The asset management business has gradually returned to the source of direct financing, the risks of shadow banking have continued to be reduced, and the transformation and development of the industry has achieved tangible results.

　　Comprehensively clean up and rectify the financial order.

The special rectification of Internet financial risks has been successfully completed, and nearly 5,000 P2P online lending institutions have all closed down.

Continue to crack down on the hype of domestic virtual currency transactions, and the proportion of bitcoin transactions in China has dropped significantly in the world.

The clean-up and rectification of financial asset trading venues has achieved positive results, the momentum of disorderly expansion and brutal growth has been effectively curbed, the number, business scale, and number of people involved have all been greatly reduced, and risks have been significantly reduced.

Deeply promote the special rectification work of "fake gold exchanges" to eliminate the regulatory vacuum.

Severely crack down on illegal fund-raising. In the past five years, a total of 25,000 illegal fund-raising cases have been investigated and dealt with.

　　"Only by adhering to the bottom line thinking, enhancing the awareness of urgency, focusing on key security areas, securing the bottom line of people's livelihood, and implementing detailed employment priority policies, can we effectively manage and control risks in key areas, prevent and resolve various risk challenges, and safely handle major financial risk events. The bottom line is that there is no systemic risk.” said Pang Ming, Chief Economist and Research Director of Jones Lang LaSalle Greater China.

　　Lou Feipeng, a researcher at Postal Savings Bank of China, believes that 2023 is the first year to fully implement the spirit of the 20th National Congress of the Communist Party of China, and it is necessary to promote the overall improvement of economic operation.

Among them, it is necessary to effectively prevent and defuse major risks, ensure the safe development of the economy, and guard against systemic financial risks. This is the bottom line.

Improve systemic financial risk prevention capabilities

　　Since the 18th National Congress of the Communist Party of China, the ability and level of my country's financial services to the real economy have been significantly improved, financial risks have been generally restrained and generally controllable, and the modernization of the financial governance system and governance capabilities has continued to advance.

At the same time, we must also see that the current task of high-quality development of financial services is arduous, financial reform, development and stability are facing a series of new issues and challenges, and hidden dangers of financial risks still exist in China, and many major problems must be solved to prevent financial risks.

　　"The COVID-19 pandemic has led to a substantial increase in government debt, damage to corporate and household balance sheets, high global leverage, financial markets are vulnerable to sentiment and macro policy factors, and some economies with heavy debt are more vulnerable to a global financing crunch. Sensitive, there are great uncertainties in the economic and financial trends of some fragile countries.” Recently, Xuan Changneng, deputy governor of the People’s Bank of China, said at the annual meeting of the 2022 Financial Street Forum that from a domestic perspective, the main indicators of the national economy have recently recovered and stabilized. Positive factors have accumulated and increased, and the overall operation is within a reasonable range.

But we must also see that my country's development has entered a period of strategic opportunities and risks and challenges, and the foundation for domestic economic recovery is still not solid.

　　In this context, it is particularly important to establish and improve a macro-prudential policy framework with Chinese characteristics and improve the ability to prevent systemic financial risks.

In recent years, financial regulatory reforms focusing on strengthening macro-prudential management have continued to advance, and my country's systemic risk prevention capabilities have further improved.

On the one hand, the top-level design of the macro-prudential policy framework has been gradually improved.

The "Macro-prudential Policy Guidelines (Trial)" was released, which systematically expounded the overall thinking, principles and policy framework of my country's macro-prudential management, and clarified policy objectives, tools, transmission mechanisms, and governance mechanisms.

On the other hand, continuously innovate and improve macro-prudential management tools and policy practices.

In view of the "big ups and downs" of financial procyclicality and cross-market and cross-departmental contagion, which are likely to form systemic risks, efforts should be made to enhance the functions of macro-prudential policy tools for counter-cyclical adjustment and contagion prevention.

　　After years of exploration and improvement, my country has initially established a macro-prudential policy framework that draws on international beneficial practices and has Chinese characteristics, and has played an important role in many fields.

In the next stage, relevant departments will conscientiously perform their leading responsibilities in macro-prudential management, and firmly hold the bottom line of no systemic financial risks.

　　First, continue to improve the macro-prudential policy framework, strengthen systemic financial risk monitoring, assessment and early warning, carry out macro-prudential stress testing, further enrich and optimize the macro-prudential policy toolbox, gradually expand the coverage of macro-prudential management, and prevent pro-cyclical financial systems Cross-market and cross-sector contagion of volatility and risk.

　　The second is to strictly implement the additional regulatory requirements, strengthen the monitoring, analysis and risk assessment of systemically important banks, promote them to continue to meet the additional capital and leverage ratio requirements, and improve risk management and internal control through the restoration of the disposal plan.

Continue to study and promote the establishment of evaluation and regulatory rules for systemically important insurance companies and systemically important securities industry institutions, and further improve the regulatory framework.

　　The third is to ensure market access, establish a risk warning and regulatory rating system, strengthen regulatory coordination, and promote the sound operation of financial holding companies.

Establish a long-term mechanism for financial stability

　　The report of the 20th National Congress of the Communist Party of China clearly stated that we must keep the bottom line of preventing systemic risks.

Xuan Changneng said that in accordance with the decision-making and deployment of the Party Central Committee, we must deepen the reform of the financial system, promote the construction of a financial safety net, and continue to strengthen the ability to prevent and control financial risks.

　　Deposit insurance is a basic institutional arrangement to prevent runs and promote the stable operation of the banking system, and is an important part of the modern financial safety net.

On the basis of years of in-depth investigation and research and extensive solicitation of opinions, my country's "Deposit Insurance Regulations" was officially implemented in 2015, and by the end of June 2022, there were 4,018 insured institutions across the country.

　　"my country's deposit insurance system aims to strengthen the protection of depositors, promote the formation of a market-oriented risk prevention and disposal framework, establish a long-term mechanism for maintaining financial stability, and promote financial reform and the healthy development of the banking industry. It has gradually emerged. In the risk disposal process of high-risk small and medium-sized banks such as Baoshang Bank, many functions of deposit insurance have been effectively played.” Xuan Changneng introduced that with the gradual development of core mechanisms such as risk differential rate, early correction, and risk disposal In the future, the market constraints on deposit-taking financial institutions will be stronger, which will help prevent and resolve financial risks in a timely manner, further enhance the overall effectiveness of the financial safety net, and promote the steady development of the financial industry.

　　Global systemically important financial institutions are large in scale, highly complex, and strongly connected with other financial institutions. They provide key financial services in the financial system and have an important impact on the efficient operation of the entire financial system.

During the 2008 international financial crisis, Western countries rescued large banking groups by providing guarantees, direct capital injections, and purchasing problematic assets. They paid high public costs, which not only increased the financial burden, but also led to the morality of "too big to fail". risk.

It is against this background that the Total Loss Absorbing Capacity (TLAC) was put forward. TLAC emphasizes that shareholders and institutional creditors should absorb losses first, reduce the cost of public fund rescue, and try to fundamentally solve the problem of "too big to fail".

　　"Strengthening the construction of TLAC, a global systemically important bank in my country, and ensuring that it has sufficient loss absorption and recapitalization capabilities will help enhance the stability and health of my country's financial system and prevent and resolve systemic financial risks." Xuan Changneng said, In October last year, the People's Bank of China, the China Banking and Insurance Regulatory Commission and the Ministry of Finance issued the "Global Systemically Important Banks' Total Loss Absorbing Capacity Management Measures", which put forward TLAC regulatory requirements for my country's global systemically important banks, and established a comprehensive TLAC regulatory framework, which will help It aims to improve the ability of global systemically important banks to serve the real economy and resist risks, and enhance the stability and health of my country's financial system.

　　In April this year, the People's Bank of China and the China Banking and Insurance Regulatory Commission issued the "Notice on Matters Concerning the Issuance of Total Loss Absorbing Capacity Non-Capital Bonds by Global Systemically Important Banks", and officially launched TLAC non-capital bonds as an innovative tool in my country, further broadening my country's global The TLAC supplementary channels of systemically important banks have enriched the product sequence of the bond market, which is of positive significance to the development of my country's financial market.

　　"Finance is an industry that manages risks, and preventing and resolving financial risks is the eternal theme of financial work." Xuan Changneng emphasized that the People's Bank of China will thoroughly study and implement the spirit of the 20th National Congress of the Communist Party of China, take the road of financial development with Chinese characteristics, and continue to focus on Do a good job in financial reform, development and stability, establish a long-term financial mechanism for maintaining stability, and firmly hold the bottom line of preventing systemic financial risks.

(Economic Daily reporter Yao Jin)