Legal Study Of Chinese Commercial Bank As The Underwriter Of Local Government Bonds

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 our country, although there were a lot of attempts since 2009, the local government bonds obtain its legal status until the amendment of the Budget Law. According to the amendment, the provinces, autonomous regions and municipalities gained the authority from under the central government to issue local government bonds. Bonds is to raise funds for social construction, therefore the bonds issuance is significant. For commercial Banks, underwriting local government bonds is a kind of intermediate business. It develops with the liberalization of government bonds. This business makes commercial banks to obtain more profits, to strengthen the contact with government departments, and will help the development of other related to local government business. Because of its well-funded and wide range of branches characteristics, the commercial banks have been the main underwriters of the local government bonds.However, the legal regulation of this business has not been good enough. Whether from the perspective of commercial Banks to engage in intermediary business or from the perspective of local government bond issuance, the rights and obligations in the relationship of the commercial bank underwriting government bonds are not clearly defined. At present, some local governments enact policies about the underwriters’rights and obligations. However, the related laws are still in lack. The lack of legislation and regulation causes that regulatory agencies are not clear, and lack of necessary supervision. These phenomena leads a series of legal risk faced by commercial Banks to carry out the business.Therefore, to develop local government bonds underwriting business of commercial banks, create good law environment is necessaryThis article is divided into four parts. Chapter 1 introduces the development of this business and then defines the legal nature and status of commercial bank as the business agent in this business. Because in our country, there is no specialization in the business agent, we can use commercial- agent relationship to define the relationship between the commercial bank and the government. On this basis, the article concludes the right and obligation of the commercial bank when underwriting the local government bonds.Chapter 2 introduces the legal frame of both the intermediate business and the local government bonds and discusses the problem of the law frame when commercial bank underwrites the local government bonds.Chapter 3 introduces America’s legislation and supervision system when commercial bank underwrites the local government bonds as an example.The last chapter presents suggestions, including legislation suggestions of both the intermedia business and the local government bonds, self-regulation of the union of banks and the internal control of commercial banks. The suggestion of the local government bond can be concluded into three parts, the issuance, the transaction and the supervision.