One Of The New Modes Of Internet Banking-the Development And Regulation Of Yuebao

On June13,2013, Alipay launched a new product Yuebao, which caused an uproar inthe financial sector. The2013is even called the first year of China’s Internet bankingyear. As in this year, China’s Internet banking industry has been rapidly developed.No matter it’s Internet financial products, third-party payment, or p2p, all the chipsare in the rapid development, causing the reform and unrest of the entire financialsector.At the same time, the innovation of Internet banking has brought new problems andchallenges to regulation of the financial industry. On t he one hand, these innovativefinancial products often faced with regulatory gaps, as with the legal system has notbeen able to penetrate a timely manner to the relevant industries; on the other hand,many Internet banking products are also related to cross fields, brought prettypressure to regulatory.Since March2014, the People’s Bank of China issued a series of multiple files to limitthe third-party payments, such as two-dimensional code payment, virtual credit cards and transaction limits. It is foreseeable that this is just the beginning; the supervisionof Internet banking sector has been put on the agenda.This article is intended to take Yuebao as an example, by the method of case studies,describing its background and development process, combined with its attachedthird-party payment platform-Alipay, and contrast " U.S. Yuebao "PayPal MoneyMarket Fund, to discuss the development and regulation of Yuebao, and compose theregulation for the entire Internet banking field.In the first chapter, the author describes the background knowledge of Internetbanking. Firstly, the author introduced the concept of financial intermediaries and thereason it exists, then leads to the next concept of "financial de-coal", also known as"financial disintermediation”. Development of the Internet has accelerated the processof financial disintermediation. With the emergence of Internet banking, the role offinancial intermediaries is greatly weakened; off coal range has not only confined tothe bank, but extends to the entire financial institutions. In this environment, theInternet banking formed a new financial model. In this model, the financial industry isno longer only a field for industry elite, ordinary people can also participate. Thus, thepopularity of Internet banking is not unreasonable. Internet banking can be dividedinto Internet banking, third-party payment, p2p and all the chips in four basic models.In the first part of the second chapter, the author focuses on the Yuebao thisinnovative product. The author analyzed the characteristics, mode of operation, assetliquidity risk of Yuebao. In the second part, the author extended to Alipay.Introducing the information security risks, fast payment and virtual credit card ofAlipay, analyzing the technical platform Alipay security risks.In the third chapter, the author compared the "U.S. Yuebao" PayPal Money MarketFund, intending to explore the systemic risks of Yuebao. The author describes thefounding of PayPal Money Market Fund, the expanding of U.S. money market fundsand the decline after the financial crisis. PayPal ultimate shut down its money-market fund business because of the macro environment of United States. Contrast Yuebaoand PayPal Money Market Fund, the two operation modes are almost identical. Butthe country’s macro-period interest rate policy is not the same with PayPal, and thusthe issue of systemic risk will not be most important for Yuebao to consider.In the last chapter of this article, the author discusses the regulatory issues of China’sInternet banking. For specific regulatory of Yuebao, the author compared the UnitedStates and other countries in the regulatory system, and analyzed the existing law,draw three possible regulatory measures for Yuebao, which was to pay the reservesagainst deposit, the early withdrawal penalty system and limit adjustments moneymarket fund investment channels. In the last part of this chapter, the author composedthe regulation for the entire Internet banking industry. The regulatory should try tofollow the rules of the market, reducing the main macro-economic policies on themicroscopic interferometer. The regulation on Internet banking should be adhering toappropriate supervision, classification supervision, collaborative supervision andcreative supervision these four basic principles.