In order to support high-quality real estate enterprises to reasonably use pre-sale regulatory funds and prevent and resolve the liquidity risk of real estate enterprises, the CIRC, the Ministry of Housing and Urban Rural Development and the People's Bank of China jointly issued the Notice on Commercial Banks Issuing Guarantees to Replace pre-sale regulatory funds (hereinafter referred to as the Notice) to guide commercial banks to follow the principles of marketization and rule of law, Issue letter of guarantee to high-quality real estate enterprises to replace pre-sale regulatory funds. The Notice points out that after the funds in the regulatory account reach the regulatory limit specified by the housing and urban and rural construction departments, real estate enterprises can apply to commercial banks for issuing letters of guarantee to replace the funds in the regulatory limit. Commercial banks can make independent decisions on the basis of fully evaluating the credit risk, financial situation, reputation risk, etc. of real estate enterprises according to the principles of marketization and rule of law, and carry out the guarantee replacement pre-sale supervision fund business with high-quality real estate enterprises. The real estate enterprise shall use the pre-sale supervision fund replaced by the letter of guarantee according to the provisions, which shall be used preferentially for project construction, repayment of due debts, etc., and shall not be used for land purchase, additional investment, repayment of shareholder loans, etc. The real estate enterprise shall undertake the obligation to make up the funds in the supervision account as agreed to ensure that the project construction funds are sufficient. The Notice requires that the letter of guarantee can only be used to replace the funds within the regulatory limit of the regulatory account for pre-sale funds established in accordance with the law and regulations. The replacement amount shall not exceed 30% of the capital amount required to ensure the completion and delivery of the project in the supervision account, and the replaced supervision capital shall not be less than 70% of the capital amount required to ensure the completion and delivery of the project in the supervision account. In addition, commercial banks are required to reasonably determine the guarantee period to ensure that it matches the project construction cycle. (Liu Xinshe)