Research On Lender Of Last Resort Legal System After Times Of Crisis

The Lender of Last Resort system is an important tool used by Government authorities on guarding against financial risks, resolving financial crisis and maintaining financial stability. With the rapid development of the global economy, more frequent financial crisis and more serious destruction, the needs of a perfect Lender of Last Resort system is even more urgent. China’s financial legal system is synchronized with the development of financial system reform, starting relatively late. As a result, the Lender of Last Resort system has many defects and deficiencies, which is increasingly unsuited to the practical needs of economic development, then it needs improvement on the base of learning from the advanced experience of western country and considering our country’s actual situations.The Lender of Last Resort system is backed by the strong currency force of its main subject, Central Bank. It is able to effectively maintain public confidence in banks and reduce the formation of a wave of bank runs, while to inject capital into banks which lack the liquidity through monetary policy tools so as to help them out of difficulties and resolve the financial crisis. The Fed’s rescue measures not only reflect the traditional legal system, lender of last resort arrangements for the succession, but also bring a number of development and subversive, for instance, the main subject of the lender of last resort for relief is still Central Bank; recipients must provide good security commodities and accept the penalty rate; the relief objects expand from the traditional banking sector to the securities, insurance and other non-bank financial institutions; in addition to direct capital injection, rediscount, open market operations and other traditional means, the positive statements that government issue and the international joint relief have become a new focus. Meanwhile, the U.S. financial supervision reform brought by the crisis would end the "too big to fail" era, and macro-prudential regulation of international financial sector will bring new development.Because of the lack of theory and practice, there are still many defects and deficiencies in The Lender of Last Resort system, for example, the rescue rules is too fuzzy; the dominant position of the Central Bank assistance is not clear; the crisis properties have not be distinguished; the loan conditions are too lenient; the rescue way is unitary; so on and so forth. After the financial crisis, China should improve the Lender of Last Resort system under the new situation and specific conditions. Meanwhile, the related supporting institution has to be perfected, establishing the information sharing mechanism of "one bank&three commissions"(Central Bank, China Banking Regulatory Commission, China Securities Regulatory Commission, China Insurance Regulatory Commission), so as to make sure Central Bank can make right decisions based on the timely and accurate information. The financial regulation authorities in every country should also strengthen their communication and coordination, and give attention to the establishment of the international lender of the last resort institution.