A Research On Legal System Of China’s Banking Macro-prudential Supervision

2008 US subprime financial crisis has influence of the global sphere, countries over the word take measure for the bailout plan to launch large-scale economic aid .International financial regulatory organizations such as the G20, the Bank for International Settlements (BIS) and the Basel Committee (BCBS) take analysis of the financial tsunami crisis and argued that the cause is systemic risk, and the existing system of micro-prudential supervision ignores systemic risk. Basel Committee promulgated Basel Ⅲhas feature in strengthening the micro-prudential supervision, and the introduction of the concept of macro-prudential regulation.China is both member countries of the G20 and the Basel Committee, the implementation of Basel Ⅲ is a statutory obligation.Macro-prudential regulation will emerge when economic development to a certain stage, the current development trend of China’s financial industry is financial mixed; there is an internal need for macro-prudential supervision. Fifth Plenary Session of the Seventeenth Party Congress clearly announced to build " macro-prudential financial management system framework for counter-cyclical", the China Banking Regulatory Commission also carried out some work to prevent systemic risk in accordance with Basel Ⅲ. Assets of the banking sector accounted for about 80% of the entire financial sector assets, the Basel Committee identified that our Bank of China, Industrial and Commercial Bank of China and Agricultural Bank of China for global systemically important financial institutions, banking has the strongest negative externalities. Improve the existing macro-prudential supervision in legal aspect is a problem need to be solved.Systemic risk can divides in two dimensions, one named spatial dimensions is exist between common risk exposures of financial institutions, and another is procyclicality of the financial system. Macro-prudential supervision has two dimensions corresponding; they are counter-cyclical regulation and supervision of systemically important financial institutions. The former is to inhibit the accumulation of risk over time, the latter to avoid excessive concentration of risk in the financial system. There are some differences in the object, nature and risks of regulatory perspective between macro-prudential regulation and supervision of micro-prudential supervision. But the two are of different levels of financial development and regulatory requirements and should be combined with each other. The micro-prudential regulatory focus on the sound operation of the single financial institutions of market, pursuing a bottom-up regulatory philosophy, whereas the macro-prudential regulatory focus on the sound operation of the financial system pursues a top-down regulatory philosophy. Changes in the financial environment such as financial mixed and financial innovation, led to the traditional micro-prudential supervision can not meet the needs of preventing systemic risk, macro-prudential supervision should be strengthen. Macro-prudential supervision is the essence of that process of financial regulation intervene in the private rights, it can better balance the interests of enterprises and financial stability at the same time, thus creating a benign financial ecological order.States have take measurers to reform the financial regulatory system to guard against systemic risk in the post-crisis era. US enacted " Dodd-Frank Act", formed an umbrella macro-prudential supervision system with the core of the Federal Reserve Board, the Financial Stability Oversight Committee for the central. The EU adopted the "EU financial regulatory system reform "act, established a Europe systemic risk monitoring committee, formed a net model macro-prudential supervision system. Britain issued the "Financial Services Act", splitting the Financial Services Authority into there supervision authority, re-establishment of the Financial Policy Committee, Prudential Regulation Authority and Financial Conduct Authority, formed a two-peak pattern of macro-prudential supervision system. These macro-prudential regulatory reforms are all make macro-prudential regulation authority and duty clear in the form of legislation, empowerment the regulatory body with the appropriate authority, take meeting mechanism as the decision-making process, however, due to specific conditions in different countries or regions, there are slight differences in the specific legal institutional arrangements. Analysis and comparison of extraterritorial macro-prudential regulatory reform experience make conclusion that reform should consider the country’s actual conditions, the central bank should play a key role in macro-prudential supervision, macro-prudential regulation and micro-prudential supervision should coordination with each other, macro-prudential supervision body and duty and power need specific in legislation, financial supervision coordination mechanism and information sharing mechanism need to improve.China’s existing financial regulatory system is a "multiple authority involvement" pattern, Central bank, CBRC, CSRC, CIRC, Ministry of Finance, NDRC and SAFE are entitled to part of the financial regulation right, however, financial supervision coordination mechanism need to improve. China’s achievement of the prevention of systemic risk, mainly proposed macro-prudential regulatory framework, the CBRC has developed a series of legal documents in accordance with Basel Ⅱ and Basel Ⅲ, such as commercial bank counter-cyclical regulatory rules, systemically important bank regulatory rules, and commercial bank risk early warning direct, and commercial banks stress test direct. China’s banking industry are still insufficient in preventing systemic risk, mainly in the absent of body to prevent systemic risk, macro-prudential supervision powers and responsibilities are not clear, coordination mechanisms and information sharing mechanism between the regulatory bodies are not perfect, tool of macro-prudential supervision system is not perfect.After learning experience outside of macro-prudential supervision and combined with China’s actual conditions, proposal to build the legal system of China’s macro-prudential supervision: regulatory target for the detection of preventing systemic risk, guidance on financial regulatory authorities to take corresponding measures, promote market discipline. Regulatory principles for prudential regulatory principles and prospective regulatory principles, systemic regulatory principles, counter-cyclical regulatory principles, Coordination regulatory principles, effective regulatory principles, incentive compatible regulatory principles. Not changing the existing sub-sector regulatory system, recommend to set up the China Financial Stability Oversight Board as regulatory body, Chief of the People’s Bank will attend President of the board, Chiefs of CBRC, CSRC, CIRC, Ministry of Finance, NDRC and SAFE are member of Board.Improve china’s financial regulatory system from the "multiple authority involvement and fragmented "model changes into "one core, multiple coordination "model system. Macro-prudential regulatory duty including the development of macro-prudential supervision policy, analysis and forecasting systemic risk, direct the work of micro-prudential regulators, special supervision of systemically important financial institutions, coordination of the multiple micro-prudential regulators, report to the state council and the National People’s Congress. Regulatory powers, including the right to information collection, powers of instructions and warnings and suggestions, Rule-making authority and adjustment, Regulatory jurisdiction of the adjudication, Special authority of systemically important financial institutions, regulation object is systemic risk. Regulatory tools are Counter-cyclical regulatory tools and systemically important financial institutions regulatory tools. Regulatory process, from the regulatory frame into analysis, policy options and tools to use, decision rules in the form of meeting, regulatory powers should be given some discretionary space, checks and balances need to be considered at the same time, maintain information disclosure. Regulatory accountability should be improve in regulatory actions accountability, accountability body, transparency there aspect.After "Deposit Insurance" act has been enacted, deposit insurance system serve as market exit mechanism of macro-prudential supervision system, deposit insurance fund management body should be joint member of China Financial Stability Oversight Board, the early corrective and risk disposal mechanism need continue to be improve. The main function of financial transaction tax is to inhibit speculative trading, to raise the bailout fund for crisis at the same time, proposal to levy Tobin tax to resist foreign capital arbitrage. Through establishment of specialized agencies and clear legal rights and obligations to improve the legal system for financial consumer protection.