Working paper of China Banking and Insurance Regulatory Commission: How to avoid repeating the mistakes of online lending platforms in the development of financial technology

In the process of rapid development of financial technology, how to give full play to its positive role and effectively deal with potential risks and challenges, establish a long-term mechanism to prevent Internet financial risks, and avoid repeating the mistakes of online lending platforms?

Recently, the second working paper of 2020 released by the China Banking and Insurance Regulatory Commission gave some thoughts and suggestions. The author of this paper, "International Regulatory Ideas for Virtual Assets and Its Enlightenment to Establish a Long-term Mechanism to Prevent Internet Financial Risks", is Li Wenhong, Secretary of the Party Committee and Director of Shenzhen Banking and Insurance Regulatory Bureau.

The 49-year-old Li Wenhong has a doctorate in economics and was the director of the Innovation Department of the China Banking and Insurance Regulatory Commission before taking a job in Shenzhen. Prior to this, Li Wenhong had publicly expressed his position on the new regulations on asset management, the construction of the bank's wealth management system, and the work arrangements for supervision and management.

Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission: Effectively prevent investment risks in financial derivatives: Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said: Effectively prevent investment risks in financial derivatives. In the case of financial derivatives where risks occurred in the early stage, a large number of individual investors participated in the investment. From the perspective of mature financial markets, institutional investors are mainly involved in financial derivatives investment, which is very unsuitable for personal investment and financial management. Always be alert to all kinds of "Ponzi schemes" that change their tricks. At present, all kinds of scams using high-interest returns as bait and under the banner of so-called financial technology and Internet finance emerge in an endless stream. Everyone must keep in mind that there will be no pies in the sky, and the promotion of "guaranteed capital and high returns" is financial fraud. Consciously raise your vigilance, enhance your risk prevention awareness and identification ability, and stay away from all kinds of illegal financial activities. [2021/6/10 23:26:27]

The working paper of the China Banking and Insurance Regulatory Commission stated that under the circumstances that the application of modern technology in financial business is accelerating, regulators should closely track and study the impact of financial technology development such as blockchain and distributed accounts on banking business models, risk characteristics and banking supervision. , strengthen communication and policy guidance with financial technology companies, strengthen the allocation of professional resources and the construction of working mechanisms, and prepare for supervision.

Voice | China Banking and Insurance Regulatory Commission Chen Weigang: There are five major obstacles to the implementation of blockchain technology: Jinse Finance reported that China Banking and Insurance Regulatory Commission’s key financial institution board of supervisors Chen Weigang said that there are five major obstacles to the implementation of blockchain technology: the first is cognitive Barriers, what is a blockchain, and whether some blockchain projects are good or bad information is not very popular; second, there are barriers to the foundation. Not enough; the third is that blockchain technology still has barriers, the standards are not unified, and the technology itself is still in its infancy; the fourth is the legal barrier, and the law has not yet determined what can and cannot be done; the fifth It is the barrier of application, and the development of blockchain will have rights and interests. [2019/12/21]

At the same time, it is necessary to penetrate and characterize the "new business and new model" in a timely manner, and clarify the nature of the business and the applicable regulatory framework.

Voice | China Banking and Insurance Regulatory Commission Yu Xuejun: Blockchain and other technologies help banks to digitally transform: On November 27th, the "Third China Digital Bank Forum" was held in Shenzhen. Attend and deliver speeches. He said that in the past year, artificial intelligence, big data, cloud computing, blockchain and other technologies have continued to help listed banks in their smart bank construction and digital transformation, and through financial technology empowerment and enrichment of financial service scenarios, a financial service ecosystem has been created. (Sina Finance) [2019/11/27]

The working paper pointed out that, generally speaking, regulatory agencies in various countries generally implement access management and continuous supervision according to the nature of financial business under the current regulatory framework. To this end, all financial regulatory departments are required to follow the principle of "penetration", regardless of the name and form of a certain business, they can see the essence through the phenomenon, conduct in-depth research on its business model, product structure and process, and analyze its business essence, Legal relationship and risk characteristics, clarify whether it needs to be included in the supervision, the type of license to apply for and the applicable regulatory rules.

According to the paper, at present, a broad consensus has been formed at home and abroad that in view of the high risk and negative externalities of the financial industry, all financial businesses should be licensed and included in financial supervision. Therefore, regardless of whether it is a financial institution or a technology company, as long as it is engaged in the same type of financial business, it should obtain a statutory financial license and follow the same business rules and risk management requirements to maintain fair competition, avoid regulatory arbitrage, and prevent illegal use of "technology" Carry out financial business in violation of regulations.

Talking about the key to establishing a long-term mechanism to prevent Internet financial risks, the paper believes that it is to be able to penetrate and characterize all kinds of business activities that are essentially "financial business" in a timely manner. In the case of licensed but out-of-scope operations and failure to comply with relevant regulatory laws and regulations in accordance with the nature of the business, timely and decisive measures should be taken when the scale is small and the social impact is small, so as to fundamentally prevent the occurrence of "similar online lending problems" in the future. Otherwise, rectification will be carried out after the illegal or irregular financial business has developed to a large scale, which will often cause financial consumers and the whole society to pay a heavy price, and will easily interfere with the normal operation of the economic and financial system.

Regarding the "regulatory sandbox", the working paper of the China Banking and Insurance Regulatory Commission stated that it is necessary to closely track and study the practical experience of various countries in the regulatory sandbox mechanism, and continuously improve my country's pilot mechanism, which is the Chinese version of the "regulatory sandbox". For businesses that can be tried but are temporarily uncertain, pilots can be carried out in a limited range first, and whether to continue to carry out and promote them can be decided according to the pilot situation. Innovation” risk hidden dangers.

At the same time, the working paper also raises some other issues that need attention, mainly including: Is there any inappropriate integration of financial business and non-financial business, and is there any cross-subsidization? Have related transactions been carried out in accordance with commercial and market principles? Have you used your monopoly position and capital advantages to dump at low prices and sell at a loss, resulting in unfair competition? In addition, has customer information been well protected, and has customer information been used inappropriately? These issues are not only related to the financial industry, but also to the long-term and stable development of my country's economy and society as a whole. Therefore, not only financial regulatory agencies, but also other government departments Issues that require intense attention and resolution.

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