Beijing / Shanghai (Reuters)-the 13th five-year Plan for the Modern Financial system, led by the people's Bank of China in the first half of 2016, has been released after risk prevention has become more important and financial regulators have merged and adjusted in the past two years. China will actively and steadily deleverage and prevent and deal with financial risks in the near and medium term, while monetary policy will further highlight the goal of price stability and gradually strengthen the role of price-based targets with interest rates as the core.
China will explore the establishment of a modern financial supervision system during the 13th five-year Plan period (2016-2020), two sources said on Monday, citing the plan compiled by the central bank, the National Development and Reform Commission and other nine ministries. Achieve macro-prudential management and financial regulation to fully cover all financial institutions, businesses, activities and their risks, and prevent and deal with outstanding risk points, including orderly disposal of bond default risks and clean-up and rectification of shadow banks.
"strengthen the coordination between monetary policy and macro-prudential policies. Monetary policy and macro-prudential policy cooperate with each other and focus on each other. Monetary policy focuses on the stability of the overall economic and price levels, while macro-prudential policy focuses on maintaining financial stability. The two complement and strengthen each other, promote financial stability while maintaining currency stability, and fundamentally improve the effectiveness of financial regulation and control. "the plan says.
Reuters has contacted the people's Bank of China about the news, but could not be reached for comment.
Monetary policyThe plan points out that the central bank will optimize the target system of monetary policy, further highlight the goal of price stability, improve the combination of monetary policy tools, strengthen price-based regulation and transmission, and continue to deepen the market-oriented reform of interest rate and exchange rate. give full play to the decisive role of financial price leverage in optimizing asset allocation. We will explore to give full play to the structural guiding role of monetary policy and optimize the orientation and structure of financial resources.
At the same time, we will gradually expand the role of treasury bonds in open market operations. We will improve the interest rate regulation and control system of the central bank, and gradually form a central bank interest rate system with the policy interest rate as the core, the upper and lower limits of the interest rate corridor and other interest rates of the central bank.
In the macro-prudential policy framework, the central bank will gradually achieve full coverage of the macro-prudential policy framework. It includes exploring the integration of more financial activities such as shadow banking, asset management products and Internet finance into the macro-prudential policy framework. Gradually bring financial market leverage and liquidity risk of financial institutions into the macro-prudential policy framework. Overall supervision and supervision of financial holding companies and important financial infrastructure, and comprehensive statistics of the financial industry.
The plan also stresses that it is necessary to actively and steadily deleverage, adjust the general monetary floodgate, and prevent the macro leverage ratio from rising rapidly. At the same time, we should enhance the transparency and predictability of monetary policy, pay more attention to guiding market behavior and social expectations, fully consider the interrelation and influence of fluctuations in the banking, securities and insurance markets, and reasonably grasp the strength and rhythm of the policy. avoid superimposed resonance caused by short-term fluctuations in various fields.
The objectives of the modern financial system during the 13th five-year Plan also include:We will significantly increase the proportion of direct financing, especially equity financing, and increase the balance of the bond market to about 100% of GDP by the end of 2020. We will achieve capital account convertibility in an orderly manner and further promote the internationalization of RMB. By the end of 2020, cross-border income and expenditure of RMB will account for more than 1/3 of all cross-border income and expenditure of local and foreign currencies.
In terms of financial infrastructure, it is clear that the central bank will take the lead in planning and implementing supervision of important infrastructure construction, and co-ordinate comprehensive statistics of the financial industry. a comprehensive financial statistical system covering all financial institutions, financial infrastructure and financial activities will be established to achieve dynamic statistical monitoring of the whole process and chain.
The plan requires all financial regulatory departments to specialize in regulatory responsibilities, strengthen micro-prudential supervision, behavioral supervision, and financial consumer protection, and promote the transformation of financial supervision from institutional supervision to equal emphasis on institutional supervision and momentum supervision. we will effectively change the practice of replacing supervision with examination and approval.
Under the background of the continuous expansion of all kinds of cross-industry and cross-market complex financial products and the unprecedented increase in the complexity of capital flows in financial markets, regulators will also develop new technologies for penetrating supervision. The implementation of penetrating supervision over the whole chain of complex financial products and the whole process of capital flow in the financial market, with emphasis on the implementation of the appropriateness supervision of investors in the whole chain, and the improvement of regulatory tools and their use of real capital, leverage and risk calculation in the whole chain.
At the same time, we will study and formulate regulatory rules for financial holding companies to strengthen overall supervision from the aspects of capital adequacy, corporate governance, related party transactions, risk concentration and so on.
In terms of the division of responsibilities between central and local financial supervision, a clear plan will entrust local governments with relevant financial supervision responsibilities to avoid moral hazard caused by local development impulses. Local governments at all levels shall not interfere with the market-oriented allocation of financial resources and the independent operation of financial institutions. Provincial governments should properly implement the responsibility of preventing and dealing with the first person responsible for illegal fund-raising, and prevent and crack down on all kinds of illegal and illegal acts, such as financial fraud, illegal fund-raising, illegal securities and futures activities, and illegal Internet financial intermediaries.
While strengthening accountability for the supervision of financial institutions, establish and improve the accountability system for regulators, and the Financial Stability and Development Committee of the State Council shall conduct operational supervision and accountability to financial regulatory departments and local governments, relevant departments shall verify in accordance with procedures and be held accountable in accordance with the law; local governments shall establish an accountability mechanism for local financial regulatory departments.
"We will build a solid system for the prevention, control and disposal of financial risks, and do a good job in preventing and defusing major risks. The plan points out that it is necessary to safely prevent and deal with financial risks in the near and medium term, and improve the long-term mechanism for risk prevention and disposal. We will speed up the improvement of the financial monitoring, evaluation and prevention system for systemic risks, establish a financial crisis management mechanism, improve the market-oriented exit mechanism of financial institutions, enhance the health of financial institutions and the stability of the financial system, and ensure national financial security.
Specific to highlight the prevention and disposal of risk points, strictly guard against liquidity risks, strictly enforce the requirements of prudent supervision of liquidity risks, and promote the interbank business of financial institutions to return to the liquidity adjustment standard; give full play to the role of deposit insurance system in the early risk correction mechanism of problematic financial institutions.
We will deal with the risk of bond default in an orderly manner, strengthen the investigation and monitoring of the debt risk of highly indebted enterprises, do a good job in the investigation of bond default risk in key industries and enterprises, and improve the market-oriented and legal bond default disposal mechanism.
At the same time, we should clean up and rectify shadow banks, implement penetrating and full-coverage supervision over all kinds of capital management business online and offline, severely crack down on illegal financial activities, such as mishandling of finance, illegal fund-raising, and illegal securities and futures activities, and issue regulations on dealing with illegal fund-raising.
The plan also said that it is necessary to improve the stock market interconnection mechanism between the mainland and Hong Kong, promote the establishment of "penetrating" supervision under the stock market interconnection mechanism between the two places, and study the orderly expansion of the target of interconnection between the two places under the premise of controllable risks. we will actively promote the interconnection of the bond markets of the two exchanges.