A Study On Legal Supervision Of Local Government Bonds In China

Local government bonds is a kind of important financial products that issued by local government in public and debt service within the agreed time. In some western countries, it played a significant role to raise funds for construction in local. In our country, as The Budget Law’s restrictive regulations, the real sense of local government bonds is not yet exist. But in fact, all kinds of Chinese-style local government bonds has quietly emerged. With the rapid expansion of its debt scale is also the gathered risk, its potential credit risk, legal risk and financial risk can not solve by it own, its urgent regulated by legal system. As an effective means of overcoming market failures in local government bonds, a solid barrier that protect creditors’legitimate property rights in maximum, law can effectively coordinate the conflict between the interests of the main parties of local government bonds. However, China’s current legal supervision system of local government bonds have many problems. For a long time, the legislative practice of local government bonds are formed a framework that is large, complex and random, administrative norms and policy instructions are the legal system’s main heading. Legal system’s content is also too abstract, lack of reasonable regulatory agencies, information disclosure system and creditor protection mechanism is weak. Existing legal supervision not only unable to prevent its potential risks effectively, but also can not reduce the negative consequences of local government bonds.Legal supervision of local government bonds in United States, Japan and France are more complete. They have sound Legal Supervision system of local government bonds, the management system of bonds are also detailed and standardized. Its perfect risk warning mechanism and effective mechanism to resolve the debt crisis also provides us some useful reference. At present, the existence of local government bonds regulatory issues has seriously hampered the development of long-term stability of local government bonds. So, if we want to form a sound Legal supervision system, we should forward-looking considering the current situation, establish and improve relevant laws and regulations, improve the level of local government bonds legislation, enhance the effects of regulation, improve the information disclosure system, establish system of debt constraint and sinking fund. Make local government bonds walk in the sunshine.