The "four-level vertical pipe" structure of the State Administration of Financial Supervision was established

On the morning of April 8, the county supervision branch of the State Administration of Financial Supervision and Administration was listed, marking the formal establishment of the "four-level vertical management" structure of the State Administration of Financial Supervision and Administration, the further improvement of the financial supervision organization system, and the important progress of the reform of the financial management system. The establishment of the county-level supervision branch has strengthened the risk monitoring and prevention and control capabilities of financial institutions, financial markets and emerging financial formats in the county. In the opinion of analysts, through the establishment of county-level supervision branches and the enrichment of regulatory forces, it will better strengthen the daily supervision of county-level branches of banks and insurance institutions, which will be conducive to reducing financial risks, maintaining financial stability, and protecting the legitimate rights and interests of financial consumers.

The county supervision branch was established

Deepening the reform of the financial management system will have a far-reaching impact on the steady operation and long-term development of China's economy. The new round of reform of the mainland's financial regulators began on March 7, 2023, when the first session of the 14th National People's Congress (NPC) held its second plenary session at the Great Hall of the People in Beijing. Entrusted by the State Council, Xiao Jie, State Councilor and Secretary-General of the State Council, made an explanation on the State Council's institutional reform plan.

The plan proposes that the State Financial Supervision and Administration will be established on the basis of the former China Banking and Insurance Regulatory Commission, and the People's Bank of China's day-to-day supervision responsibilities over financial holding companies and other financial groups, financial consumer protection responsibilities, and investor protection responsibilities of the China Securities Regulatory Commission will be transferred to the State Financial Supervision and Administration Administration. At the same time, the CBIRC will no longer be retained.

On May 18, 2023, the State Administration of Financial Supervision and Administration was officially established and inaugurated, and 36 dispatched agencies were set up nationwide, including the regulatory bureaus of 31 provinces (municipalities and autonomous regions) in Chinese mainland such as Beijing and Shanghai, plus the regulatory bureaus of 5 cities in Shenzhen, Dalian, Ningbo, Xiamen and Qingdao. Two months later, on the morning of July 20, the unified listing of dispatched agencies in Beijing, Shanghai, Guangdong, and Sichuan also indicates that the integration and synergy of financial regulatory resources have been further improved.

The reform of county-level institutions is an important part of this reform, and the establishment of county-level supervision branches will lay a solid foundation for building a complete and effective modern financial regulatory system and promoting the high-quality development of financial supervision. The heads of the supervision branches of the State Administration of Financial Supervision and Administration unanimously expressed at the listing ceremony on the same day that they would conscientiously implement the work requirements of the Party Committee of the State Administration of Financial Supervision and Administration, combine the responsibilities and missions of financial supervision in the new era, focus on strengthening the "five major supervisions", give full play to the role of "strong outposts" of supervision, and conscientiously do a good job in the "five major articles" of finance around the economic and social development of the county. In particular, we should take the institutional reform as an opportunity to carry out the project of "new institutions, new styles, new construction, and new images", and be brave enough to be the "iron army" of financial supervision with strong politics, ability, and work style.

The establishment of county-level supervision sub-bureaus has extended the tentacles of financial supervision to the grassroots level. Zeng Gang, director of the Shanghai Finance and Development Laboratory, said that the establishment of the county-level supervision branch will supplement the regulatory capacity, scope and responsibilities of the State Administration of Financial Supervision and Administration, achieve full coverage of the entire financial supervision, and avoid a "regulatory vacuum", which is an important foundation for the financial supervision system.

Dong Ximiao, chief researcher of Zhaolian, emphasized that after the establishment of the county-level supervision branch, the State Administration of Financial Supervision and Administration has basically formed a regulatory system of "General Administration-Provincial Bureau-Branch-Branch", which will help build a full-coverage and seamless financial regulatory framework, better implement the "five major supervisions", and help better prevent and resolve financial risks. The establishment of county-level supervision branches and the enrichment of regulatory forces will better strengthen the daily supervision of county-level branches of banks and insurance institutions, which will help reduce financial risks, maintain financial stability, and protect the legitimate rights and interests of financial consumers.

All financial activities will be regulated

Looking back at the historical process of the mainland's financial reform, we can see that behind the transformation of the financial regulatory system from merger to separation, there are different market backgrounds and needs. From 1948 to 1991, the mainland's financial industry was in an era of mixed supervision, with the People's Bank of China (PBOC) supervising all financial activities in a unified manner, and at the same time, the "seeds" of separate supervision were also quietly sown. Beginning in 1979, the four major state-owned commercial banks, namely the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, and the China Construction Bank, were either independent, restored, or established, gradually separating the commercial banking business of the People's Bank of China and allowing it to focus on the core functions of the central bank, such as formulating and implementing monetary policy and maintaining financial stability.

From 1992 to 2002, the trend of financial industry supervision became more prominent. With the increasing number of market entities and the establishment of stock exchanges and other institutions, it is no longer feasible to uniformly supervise insurance, banking, trust and securities companies, so the China Securities Regulatory Commission and the China Insurance Regulatory Commission were established in 1992 and 1998 respectively.

The next stage was in April 2003, when the former China Banking Regulatory Commission (CBRC) was established to supervise and manage banks, financial asset management companies, trust and investment companies and other depository financial institutions in a unified manner, and the "one bank, three commissions" separate supervision system was established. After that, until April 2018, in order to strengthen the ability to supervise cross-industry and cross-market financial risks, the former China Banking and Insurance Regulatory Commission was officially put into operation, and the financial regulatory framework was transformed into "one bank, two sessions".

With the continuous acceleration of the reform of the financial system, the financial supervision and control functions of the People's Bank of China have gone through a process of decentralization and comprehensiveness to gradual subdivision and divestment.

According to media reports, recently, the People's Bank of China and the State Administration of Financial Supervision and Administration jointly held a meeting on the transfer of personnel from 1,571 county (city) branches to implement the transfer of all personnel of county (city) branches of the People's Bank of China to the State Administration of Financial Supervision and Administration. The convening of this meeting means that the personnel of 1,571 county (city) branches of the People's Bank of China have been officially transferred to the State Administration of Financial Supervision and Administration.

Dong Ximiao pointed out that as the main supervisory force of the central financial management department in the county, the county supervision branch of the State Financial Supervision and Administration should promote departmental coordination and central and local coordination, strengthen communication and coordination with the People's Bank of China and the local branch of the China Securities Regulatory Commission, strengthen coordination and cooperation with the local party committee, financial commission and the State Administration of supervision, and give full play to the joint regulatory force of the central and local governments to achieve high-quality financial development and improve the quality and efficiency of serving the real economy.

According to Zhou Yiqin, a senior financial policy expert, previously, the supervision branch existed in the form of a supervision group, and there were certain limitations in terms of resource allocation and staffing. After the official listing, the functions and responsibilities of the supervision branch will be clarified, and more adequate regulatory resources and support will be provided to ensure the smooth development of the supervision work. In terms of personnel structure, most provinces (cities) have merged county-level branches of the People's Bank of China into local city-level financial supervision sub-bureaus, thus establishing county-level supervision branches, which has greatly enriched the strength of municipal and county-level supervision departments and made the financial supervision team "strong and strong".

Zeng Gang further pointed out that the focus of the work will be around the strengthening of the "five major supervisions", licensed financial institutions, local quasi-financial entities, and some illegal financial activities will be included in the scope of control, which also means that the modern financial supervision system, the overall competitiveness, efficiency, standardization process, and risk prevention and control capabilities of the financial industry will be further improved.

Beijing Business Daily reporter Song Yitong