Making up for Shortcomings, Preventing Risks, Strictly Regulating Finance, Releasing Strong Signals
2024-06-05
"Long teeth with thorns" and "preventing and resolving financial risks" have become key words in the financial field this year. Recently, the central high-level meeting and financial regulatory authorities made three statements within five days, signaling that strict regulation and risk prevention will continue to escalate. For key areas, the new round of financial regulation will prioritize "strictness", and the key to preventing and resolving financial risks is to fill the institutional gap in the field of financial risk accountability and improve regulatory and law enforcement efficiency. It is understood that the disposal of risk areas such as small and medium-sized financial institutions and insurance delivery buildings will continue to be promoted in the future. At the same time, the improvement of institutional shortcomings will also be accelerated. Seven departmental rules, including the Administrative Penalty Measures of the China Banking and Insurance Regulatory Commission, will be revised this year, and six departmental rules, including the Implementation Measures for Administrative Licensing Matters of Policy Financial Institutions, will also be formulated. The Political Bureau of the Central Committee of the Communist Party of China held a meeting on May 27th to elevate the prevention and resolution of financial risks to a new level. The meeting pointed out that preventing and resolving financial risks is related to national security, overall development, and people's property security, and is a major gateway that must be crossed to achieve high-quality development. The meeting also emphasized that we must adhere to the principle of strictness, dare to confront challenges, dare to manage strictly, and truly manage strictly. We must release a strong signal that accountability must be held accountable for dereliction of duty, and promote financial regulation to truly achieve "long teeth with thorns" and sharp edges. We must establish a strict tone, measures, and atmosphere in the financial field and persist in it for a long time. "In a paragraph of less than a hundred words, 7 'strict' characters appear." Tian Lihui, Dean of the Institute of Financial Development at Nankai University, analyzed that this means that financial regulation must strictly enforce the law, dare to show its strength, increase punishment, and take a zero tolerance attitude to crack down on financial market chaos, significantly increase the cost of illegal activities, and effectively enhance regulatory deterrence and effectiveness. The State Administration for Financial Supervision and Administration also held a party committee meeting on the afternoon of May 27th. The meeting emphasized that preventing and resolving financial risks, especially preventing systemic financial risks, is the fundamental task of financial work. At the same time, it was pointed out that we must fully implement the requirements of strong supervision and strict supervision, and truly achieve "long teeth with thorns" and sharp edges. Overall, China's financial system is generally stable and financial risks are generally converging. The main operating and regulatory indicators of banking, insurance, and securities financial institutions are all within a reasonable range. According to the meeting, China's financial risks still focus on small and medium-sized financial institutions, real estate, and local debt. The reform of insurance in the above-mentioned fields has also made positive progress. Since the beginning of the year, regulatory authorities have focused on key areas and implemented precise policies, and nearly 20 rural banks have achieved reform and restructuring. For example, Hainan Rural Commercial Bank, the first local legal person bank in China to be reformed and established according to the unified legal person model throughout the province, was recently listed and established. Prior to this, reform plans for rural credit in multiple provinces have also been implemented, including the establishment of Zhejiang Rural Commercial Bank, Liaoning Rural Commercial Bank, Shanxi Rural Commercial Bank, Henan Rural Commercial Bank, and others. The real estate financing coordination mechanism is an important measure for ensuring the delivery of properties in the current real estate sector. Li Yunze, Director of the State Administration for Financial Supervision and Administration, recently visited the urban areas of Zunyi and Guiyang to investigate the implementation of the coordination mechanism for urban real estate financing, emphasizing the need to fight a tough battle against the "unfinished risk" of commercial housing. According to data from the State Administration of Financial Regulation, as of May 16th, commercial banks have approved a loan amount of 935 billion yuan for "whitelist" projects according to their internal approval process. In order to further prevent and resolve risks and improve regulatory effectiveness, the institutional shortcomings in the financial sector will be accelerated to be filled. The deliberation of the Central Political Bureau meeting on the "Provisions on Accountability for Preventing and Resolving Financial Risks (Trial)" means filling the institutional gap in the field of financial risk accountability. A new round of prevention and resolution of financial risks will officially begin, and the subsequent process of prevention and resolution of financial risks will accelerate, with increased efforts and efficiency. On May 31st, the State Administration for Financial Regulation released the 2024 legislative work plan, which includes revising seven departmental rules such as the Administrative Penalty Measures of the China Banking and Insurance Regulatory Commission, and formulating six departmental rules such as the Implementation Measures for Administrative Licensing Matters of Policy Financial Institutions. Industry insiders say that this series of measures have all released strong regulatory signals, such as eliminating regulatory gaps and blind spots, increasing administrative penalties, and protecting the legitimate rights and interests of consumers. "The State Administration for Financial Regulation will accelerate the improvement of the 'four pillars and eight pillars' of the financial legal system, focusing on addressing issues such as insufficient shareholder regulatory basis, imperfect risk disposal mechanisms, and low administrative penalties, and striving to' package 'the shortcomings of the system." The Party Branch of the Regulations Department of the State Administration for Financial Regulation has written an article stating that it will further enhance the transparency and legalization level of regulatory and law enforcement behaviors such as market access, daily supervision, inspection and inspection, and administrative penalties, and effectively improve the effectiveness of financial supervision. Dong Ximiao, Chief Researcher of Zhaolian, stated that financial regulation should be "sharp and sharp", which is not only an important part of building a strong financial country, but also an important measure to prevent and resolve financial risks. This poses new and higher requirements for strengthening and improving financial regulation, and also indicates that strong and strict financial regulation will continue and deepen. (Lai Xin She)
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