Li Yang: In the new era, we should speed up the pace of financial reform in various fields

Source: Economic Reference Newspaper

Li Yang, chairman of the National Finance and Development Laboratory and member of the Faculty of the Chinese Academy of Social Sciences, delivered a speech on "Financial Reform under the New Development Pattern" at the 2021 China Currency Brokerage Forum and the opening ceremony of Ueda Yagi Currency Brokerage (China) held recently. He said that the focus of China's financial reform in the new era is to deepen the reform of financial institutions, optimize the financial organizational structure, strengthen the construction of financial infrastructure, build a capital market with Chinese characteristics, and continue to promote the reform of policy-oriented financial institutions.

Li Yang said that in the more than 40 years of reform and opening up, the scale of China's financial institutions has expanded rapidly and its financial strength has increased rapidly. Structurally, although the financial institution system dominated by banks is conducive to rapidly gathering financial resources, engaging in large-scale investment and "doing big things", there are also some drawbacks, such as insufficient ability to cope with the aging of the population and insufficient ability to support innovation.

Li Yang proposed that in the next step of financial institution reform, it is necessary to benchmark the pain points and difficult problems of development and deepen the reform in five aspects: First, deepen the reform of commercial banks. Accelerate the transformation of commercial banks into service industries, reduce excessive dependence on interest margins, and steadily promote the transformation of commercial banks into mixed operations; second, promote the reform of the pension mechanism; third, vigorously develop the insurance industry; fourth, encourage the development of various non-bank financial intermediaries such as investment banks, various funds, trusts, VCs, PE, and financial leasing; and fifth, complete the task of improving the financial system of commercial finance, development finance, policy finance, and cooperative finance with a reasonable division of labor and complementarity put forward by the Third Plenary Session of the Eighteenth Central Committee.

The reform of the capital market with Chinese characteristics includes four aspects: First, the construction of various asset management institutions. Strengthen the construction of asset management, wealth management and financial investment institutions. Second, credit supports equity financing, mergers and acquisitions, equity capital loans, etc. Third, banks cooperate with investment institutions and link investment and loans. Fourth, improve the function of banking services in the capital market.

Li Yang pointed out that the financial industry has always been the main field of scientific and technological application, and the use of financial technology to transform traditional finance is the basic way of financial development. Therefore, how the development of financial technology determines the future competitiveness of the financial system of a country and a place. According to the ranking of the number of financial technology enterprises, China ranked third in the world in 2019, which fully shows that China's financial technology development must make greater efforts in the underlying science and technology and institutional system guarantees. (Kwan Shin)