Cao Yu, Vice Chairman of the Banking and Insurance Regulatory Commission: Build an effective financial regulatory system under the new development pattern

Per reporter: Song Ge Per intern reporter: Xiao Shiqing Per editor: Liao Dan

On November 28, at the 2020 China Society of Finance and Finance Annual Conference and the Annual Meeting of the China Financial Forum, Cao Yu, Vice Chairman of the China Banking and Insurance Regulatory Commission, delivered a speech on the theme of "Building an Effective Financial Regulatory System under the New Development Pattern". At the meeting, he pointed out: "As of now, bank credit financing accounts for 61% of the total social financing, and investment bonds on and off the balance sheet account for 67% of the balance of the bond market in the same period, which strongly supports the development of the real economy." ”

It is worth noting that in terms of financial supervision, he said that the "three advantages" principle of whether it is conducive to supporting the real economy, whether it is conducive to preventing financial risks, and whether it is conducive to protecting the legitimate rights and interests of consumers will be taken as the basic criterion for measuring the rationality of financial innovation, and resolutely crack down on "pseudo-innovation" and "chaotic innovation" behaviors that deviate from the needs of the real economy, endanger financial stability, and infringe on the rights and interests of consumers.

<h2>In recent years, the supervision of banking and insurance has achieved remarkable results</h2>

Cao Yu believes that in recent years, the CBRC has made great progress in the capacity building of supervision. Specifically, the first is to continue to consolidate the construction of the regulatory rule of law. With the support of basic laws such as the Commercial Bank Law, the Insurance Law, and the Trust Law, 123 effective regulations and more than 1,300 normative documents have been formulated, providing a solid institutional foundation for supervision.

The second is to strictly carry out supervision and law enforcement. Since 2017, a total of 10,865 banking and insurance institutions have been punished, 13,823 responsible personnel, and the total amount of fines and forfeitures has been 8.737 billion yuan, more than the sum of the previous ten years; 767 people have been disqualified from holding offices and 766 people have been banned from practicing, and the seriousness and authority of supervision are deeply rooted in the hearts of the people.

The third is to take effective measures against weak links. Severely crack down on the chaos of shareholder behavior, successively promulgated the "Interim Measures for the Administration of Equity of Commercial Banks" and the "Measures for equity custody of commercial banks", strengthened the penetrating review of shareholder qualifications, cleaned up the equity of illegal shareholders, and implemented centralized custody of equity of unlisted banks.

Cao Yu said that after the cooperation between the Banking and Insurance Regulatory Commission and various departments, the service level of the banking and insurance industry has been continuously improved. First, give full play to the role of the main force of the banking industry. The number of existing institutions in the banking industry exceeds 4,600, accounting for 86% of the total number of financial institutions; the asset scale is about 315 trillion yuan, accounting for 91% of the total assets of the financial industry. Up to now, bank credit financing accounts for 61% of the total social financing, and on-balance sheet investment bonds account for 67% of the bond market balance in the same period, which strongly supports the development of the real economy. The second is to better play the service guarantee function of the insurance industry. In the first 10 months of this year, the insurance industry covered a total of 7349 trillion yuan, and the compensation and payment expenditure was 1.1 trillion yuan. At the same time, insurance funds invested 21 trillion yuan in equity and debt, providing long-term and stable support for the development of the capital market and the construction of key areas.

<h2>Take the initiative to shape the concept of financial supervision that is in line with the new development pattern</h2>

"Under the new development pattern, financial regulators shoulder new missions and tasks, and need to constantly explore regulatory concepts and methods under the new situation, persistently improve the effectiveness of supervision, and form a benign interaction and positive incentive between supervision and the market." Cao Yu said.

He believes that the most basic experience gained from the long-term practice of financial supervision at home and abroad is to follow the objective law of financial operation. First, we must adhere to the prevention of financial risks as the primary goal. Second, we must persist in taking serving the real economy as a fundamental task. Finance and the economy coexist and prosper, leaving the real economy self-circulation, will only exacerbate the accumulation of financial risks. The third is to adhere to the protection of the legitimate rights and interests of consumers as an important mission. Finance has a strong public attribute, which is related to the people's wealth security and living security, and regulators should run consumer protection through the entire process of supervision and maintain a "zero tolerance" attitude towards violations of laws and regulations.

Second, we must maintain regulatory determination. "Under the unprecedented major changes in a hundred years, the domestic and foreign environment has undergone profound changes, and financial supervision should be based on the basic pattern of separate operation and supervision of China's financial industry, establish a bottom-line thinking, and maintain strategic determination." Cao Yu said that the first is to adhere to the concentration of professional focus. The Party Central Committee and the State Council firmly implemented the reform of the financial regulatory system, established the China Banking and Insurance Regulatory Commission, and further integrated and strengthened the responsibilities of banking and insurance supervision. Second, we must adhere to the determination of supervision according to law. Supervision according to law is the boundary and behavior criterion for regulators to perform their duties, and it is also the source and basis for regulatory authority. We must always maintain the transparency of regulatory rules, maintain the consistency of regulatory standards, and treat Chinese or foreign-funded institutions, state-owned or private institutions equally, and apply consistent regulatory standards.

In addition, it is necessary to release the vitality of institutions. "At present, the contradiction between the imbalance and inadequacy of China's financial supply and the multi-level and diversified financial demand is still relatively prominent, and it is equally important to stimulate the market vitality of financial institutions and promote the high-quality development of the financial industry." Cao Yu believes that the first is to deal with the relationship between strengthening supervision and supporting innovation. We will always take the "three advantages" principle of whether it is conducive to supporting the real economy, whether it is conducive to preventing financial risks, and whether it is conducive to protecting the legitimate rights and interests of consumers, as the basic criterion for measuring the rationality of financial innovation, and resolutely crack down on "pseudo-innovation" and "chaotic innovation" behaviors that deviate from the needs of the real economy, endanger financial stability, and infringe on the rights and interests of consumers. The second is to properly handle the relationship between large institutions and small and medium-sized institutions. Pay attention to the differences and characteristics of different types of institutions in terms of their own resource endowments, business ecology, market positioning, development strategies, etc., do a solid job of classified supervision and differentiated supervision, and strive to create a benign financial symbiosis environment in which all kinds of financial institutions develop in a dislocated manner, complement each other's advantages, refine the division of labor, and compete in an orderly manner, so as to meet the multi-level and diversified financial needs.

In Cao Yu's view, under the new development pattern, the financial industry and regulators are facing new situations and tasks, and the CBRC will adhere to the bottom line of principles, strengthen the construction of a modern regulatory system, improve regulatory methods and methods, and enhance regulatory efficiency. First, continuously strengthen institutional supervision. The second is to achieve full coverage of risk supervision. The third is to vigorously promote coordinated supervision.