The Study On The Legal Regulation On Moral Hazard Of Systemically Important Financial Institutions

There has no unanimous and standard definition of the Systemically Important Financial Institutions, we may consider them as those which have large-scale and complicated business, they could bring a marked impact to the local or global financial system when they are in risk, thus so called "too big to fail" financial institutions. The international standard which is used to judge whether it is the Systemically Important Financial Institutions is the <Guidance to Assess the Systemic Importance of Financial Institutions, Markets and Instruments> that is submitted to finance ministers and central bank governors of G20by IMF, BIS and FSB in October2009, thus judging the importance of system from the scale of financial institution, fungibility and correlation.The moral hazard of Systemically Important Financial Institutions become more and more obvious under nowadays’ economic environment:some Systemically Important Financial Institutions who have deep pockets and are irreplaceable ignore their community responsibility, invest in highrisk area without fear and quest for profit madly owing to they think that government will not let them run their own courses. It may cause a chain reaction and then make the crisis spread and deepen like Domino if we didn’t give a hand to them in face of the moral hazard of Systemically Important Financial Institutions; otherwise it could intensify the expectation of those financial institutions to "too big to fail" and lead to serious moral hazard. The origin of this kind of moral hazard actually comes from the negative externality and the conviction of "too big to fail", it is the top priority to overcome the moral hazard in those two aspects during the self-examination of the crisis and the practice of international regulatory reform, the international organizations and national regulatory authorities should realize that rescue is just a kind of emergency step, the strengthening of regulatory is the basic path to solve the problem, we must keep a look-out to the moral hazard by strengthening the regulatory of the Systemically Important Financial Institutions.G20and FSB have already realized the importance of strengthening the regulatory of the Systemically Important Financial Institutions as a tower of strength in the reform of international financial regulatory since2009. Hence FSB puts forward <Plan of reducing the moral hazard of the Systemically Important Financial Institutions> and establishes a framework against "too big to fail". Then FSB issues <Policy recommendations and Schedule of reducing the moral hazard of the Systemically Important Financial Institutions> and comes up with a policy framework and some suggestions about strengthening the financial regulatory of the Systemically Important Financial Institutions in October20th2010. And then, several state leaders approve the <Identical elements of effective disposal mechanism of financial institutions,<The appraisal procedures and additional loss absorption capacity requirements of global Systemically Important Financial Banks> and <Strengthen intensity of regulatory and availability of the Systemically Important Financial Institutions> and a series of significant documents which are drafted by Basel Committee On Banking Supervision and FSB, some relative measures will be taken from2012.The financial development of China has made a series of achievements during the continual development of Reform and Opening up, the financial system is in the constantly improvement, but there exists many problems to be solved, such as institutional defects of economic structure, association of risk of financial institutions, poor ability of internal control, low quality of employees, faulty of regulatory and inadequate of financial innovations, finally they will set the stage for the burst of the moral hazard and trigger a new round of economic fluctuation if those cannot be treated significantly and well solved. Therefore, it is the inevitable choice to prevent the moral hazard that we must find out the problems in our country’s Systemically Important Financial Institutions and hunt for a perfect solution.When it comes to China, the Systemically Important Financial Institutions originate from the historical and institutional reasons holds an absolute dominant position in financial system, with the development of financial reform and financial innovations, our country will take steps to bring the Systemically Important Financial Institutions into the frame of reform of financial regulatory according to get experiences from the US, Switzerland, Japan and other developed countries, and start with effectively identifying the systemically important financial institutions, closely integrating micro-prudential supervision and macro-prudential supervision, improving the financial laws and regulations, establishing the coordination mechanism of financial regulatory, completing the effective disposal system for the systemically important financial institutions, strengthening the management of internal risk of the systemically important financial institutions, improving the quality of regulatory officers in order to prevent the moral hazard of the systemically important financial institutions.