Shang Fulin: Do a good job in preventing and resolving financial risks under the impact of the epidemic

Preventing and defusing financial risks, especially preventing systemic financial risks, is the fundamental task of financial work. At present, internal and external risk challenges are increasing, and the pressure to prevent the spread of risks internally and the contagion of risks externally is increasing. We should adhere to the positioning of serving the real economy, do a good job in "six stability" work, implement the "six guarantees" task, deepen the structural reform of the financial supply side, enrich risk resolution methods, and increase risk disposal and resolution efforts.

Preventing and defusing financial risks, especially preventing systemic financial risks, is the fundamental task of financial work. The battle to prevent and resolve major risks is the first of the three battles to secure a decisive victory in building a moderately prosperous society in all respects. Among them, financial risk is one of the most prominent major risks and is regarded as the “primary battle”. The COVID-19 epidemic that broke out at the beginning of the year has had an unprecedented impact and scope on the economy and society. Coupled with the uncertainty of the international epidemic situation, the economic downturn has been accompanied by increased upward pressure on financial risks, making prevention and control significantly more difficult. In the face of severe situations and internal and external shocks, it is necessary for all parties to further enhance their understanding, strengthen confidence, and enhance their predictions, organically combine preventing financial risks with serving the real economy, deepening financial reforms, and actively respond to difficulties and challenges.

Continuously improve the awareness of preventing and controlling financial risks, and always maintain a high degree of vigilance against risk changes.

First, continue to improve the monetary policy control mechanism. The monetary policy objectives of maintaining currency value stability and promoting economic growth have been established, and policy tools and regulatory measures have been continuously innovated. Carrying out countercyclical adjustments based on changes in the economic situation has played an important role in controlling inflation and preventing deflation. It has steadily suppressed hyperinflation caused by overheated investment and other factors in the early stage of reform and opening up, successfully responded to the 1997 Asian financial crisis and the 2008 international financial crisis, withstood the test of economic cycles, and avoided external risk contagion. In response to this epidemic, by adopting a more flexible and appropriate prudent monetary policy and innovatively using a variety of monetary policy tools and measures, we ensured reasonable and sufficient liquidity and effectively supported epidemic prevention and control and economic and social development.

The second is to continuously strengthen the financial supervision system. From the centralized financial management system with the People's Bank of China as the single subject to the formation of a complete industry-specific supervision structure, from administrative and compliance supervision to prudential risk supervision, a financial security barrier to support economic development has been built. The banking supervision concept of "managing legal persons, managing risks, managing internal controls, and improving transparency" and the "three public obligations" principles of openness, justice and fairness in the securities market are deeply rooted in the hearts of the people. In 2018, the Financial Stability and Development Committee of the State Council was established and the China Banking and Insurance Regulatory Commission was officially established. The overall coordination role of financial supervision has been further exerted, and the authority, professionalism, uniformity, and penetration of financial supervision have been further strengthened. The legal construction and internationalization level of the financial industry are increasing day by day.

The third is to continuously increase efforts to deal with and resolve risks. In the early days of reform and opening up, we took heavy measures to rectify the financial order, resolutely banned illegal financial institutions and illegal financial business activities, rectified the "three financial chaos", and cleaned up the "triangular debt". Since the 18th National Congress of the Communist Party of China, a series of measures have been taken to rectify financial market chaos and actively promote structural deleveraging. In view of the accumulation of risks in financing platforms, real estate, cross-finance and other fields, highlight risk prevention and control in key areas and weak links. The scale of shadow banking has been significantly reduced, and the hidden debt risks of local governments have gradually been resolved. A number of major illegal fund-raising cases were severely investigated and dealt with. In the securities market, we will severely crack down on insider trading, market manipulation, financial fraud and other illegal activities to purify the market environment. On the other hand, actively explore innovative disposal and resolution methods. In the late 1990s, special treasury bonds were issued to inject capital into the four major state-owned banks and asset management companies were established to take over non-performing assets, creating a new approach to market-based disposal of financial risks. In recent years, a large amount of historical burden has been resolved by deepening the reform of small and medium-sized banks and promoting mergers and reorganizations of high-risk institutions; promoting the creditor committee mechanism and promoting debt restructuring and bankruptcy reorganization of problem enterprises. Actively build a market-oriented loss absorption and risk prevention mechanism, and establish an orderly financial risk disposal framework with deposit insurance as a platform.

The fourth is to continuously improve the long-term mechanism for risk prevention and control. The corporate governance and internal control reforms of financial institutions have been comprehensively deepened. The share-trading reform in the securities market has cracked the fundamental institutional obstacle of different rights for the same shares. The joint-stock reform of state-owned commercial banks has been completed, and the reform of the management system and property rights system of rural credit cooperatives has achieved phased results. The equity structure has been optimized, and the "three meetings and one layer" governance organizational structure has been basically established, laying the foundation for modern corporate governance. In recent years, regulatory authorities have strengthened penetrating supervision of shareholder equity, urged commercial banks to establish an asset and liability constraint mechanism centered on capital adequacy ratios, establish a modern business philosophy of capital constraints, and accelerate the construction of a comprehensive risk management system.

In-depth study and judgment of the impact of the epidemic on the financial risk prevention and control situation

Currently, the domestic economic and social order is gradually recovering, and the global economic and political landscape is facing deep adjustments. Internal and external risk challenges are increasing, and the pressure to prevent the spread of risks internally and the contagion of risks externally is increasing.

Make every effort to prevent and control financial risks under the new situation

Although the epidemic has had an important impact on the economy and finance, disrupting the normal order of economic life. At the same time, we must also note that the exogenous impact brought by the epidemic has not changed the inherent resilience and long-term positive fundamentals of my country's economic growth. As production and living order accelerates to recover, financial market operations will also tend to normal. In addition, the impact of the epidemic on the financial industry is generally within the expected range. The existing policy reserves and adjustment space are relatively sufficient. Coupled with the results of early financial risk prevention and control work, the banking industry's provisioning capacity and the insurance industry's solvency are currently at The non-performing loan ratio is still at a relatively low level compared with the international level, and the stock market, bond market, and foreign exchange market are generally operating smoothly, leaving room for maneuver in response to current risk challenges. Based on the above judgment, regardless of historical experience or current financial market conditions, we are confident that we will win this battle against risks under the strong leadership of the Party Central Committee and the State Council.

First of all, we must adhere to the positioning of serving the real economy, do a good job in the "six stability" work, and implement the "six guarantees" task. The healthy development of the real economy is the basis for preventing and defusing financial risks. If finance is active, the economy is active; if finance is stable, the economy is stable. The current top priority is to implement policies accurately, make every effort to do a good job in the "six stability" work, implement the "six guarantees" task, focus on key areas of the real economy, build a capital circulation system to ensure the smooth operation of the real economy, and promote the formation of a virtuous economic and financial cycle. First, precise and intensified regulation at the macro level. Continue to scientifically and steadily use countercyclical macro-adjustment measures to guide loan interest rates and bond interest rates downward, and guide the use of support funds such as targeted reserve requirement ratio cuts to stabilize enterprises and maintain employment, stimulate household consumption, release potential demand, hedge against the impact of the epidemic, and stimulate economic recovery. . The second is to focus on key regions, industries and weak links at the meso level. In particular, we should solve the financing problems of private and small and micro enterprises. This is not only related to the overall situation of employment, people's livelihood and social stability, but also closely related to the quality of banks' own credit assets. Further expand corporate financing channels, adopt unconventional and temporary special means, provide support such as loan renewal, extension, and increase of credit lines, provide reasonable profits to enterprises, ease the pressure on corporate financial expenditures and liquidity, and help small and medium-sized enterprises that have temporary difficulties caused by the epidemic. Micro-enterprise bailout. The third is to optimize financial products and service methods at the micro level. Guided by market demand, we use technology and other means to provide differentiated financial services and customized financial products, and work hard to continuously improve the quality and efficiency of financial services to the real economy.

Secondly, deepening the structural reform of the financial supply side is the fundamental strategy to resolve risks. The 2020 Government Work Report proposed that the greater the difficulties and challenges, the more necessary it is to deepen reforms. The more severe and complex the development environment becomes, the more we must unswervingly deepen reforms. Under the premise of normalized epidemic prevention and control, we must continue to adhere to the supply-side structural reform as the main line, rely on reform to remove institutional obstacles, improve the quality of the financial supply system, and enhance the adaptability of the financial structure. The first is to focus on the adjustment and optimization of the financial system structure and build a comprehensive and multi-level financial support service system.

Deepen the reform of small and medium-sized banks, improve the multi-layered, wide-coverage, and differentiated banking system, strengthen endogenous capital replenishment, broaden exogenous replenishment channels, enhance capital strength, and cultivate core competitiveness. Deepen the reform of the basic system of the capital market, create a standardized, transparent, open, dynamic and resilient capital market, and increase the effective supply of capital. The second is to strengthen the corporate governance and comprehensive risk management systems of financial institutions. In accordance with the principles of marketization and rule of law, we will accelerate the construction of a modern financial enterprise system with Chinese characteristics to provide institutional guarantees for serving the real economy and preventing and controlling financial risks. We will further improve the "three meetings and one layer" structure in which each company performs its duties, has effective checks and balances, and coordinates operations, and promotes the in-depth integration of the party's leadership and corporate governance. Strengthen capital management and solvency management of financial institutions, establish an incentive and restraint system that balances risks, development and benefits, promote a risk-based corporate culture, and improve risk resistance.

Finally, enrich risk resolution methods and increase risk handling and resolution efforts. Preventing and resolving financial risks is an eternal theme in financial work. The first is to consolidate the results of previous rectifications and prevent risks from rebounding. Maintain regulatory focus, promote the transformation and development of the asset management industry, prevent shadow banking and cross-financial risks, closely monitor risk conditions in key areas such as real estate and local government debt, and strive to achieve early identification, early warning, early detection, and early disposal. We will continue to carry out rectification of equity and related-party transactions, and resolutely crack down on shareholders' violations of laws and regulations. Properly and orderly handle illegal fund-raising activities in key areas such as online lending and private equity to maintain overall social stability. The second is to actively deal with and resolve new exposure risks. We will seize key groups such as small and medium-sized banking institutions and implement classified policies based on different types of risks to "precisely dismantle bombs." Through various methods such as debt committees and market-based debt-for-equity swaps, we will increase efforts to dispose of non-performing loans and improve disposal efficiency. The third is to strengthen daily risk monitoring and assessment. We will implement asset classification, carry out stress testing, find out the risk base, and formulate contingency plans for all types of risk disposal in a forward-looking manner. Evaluate, adjust and supplement relevant policies and measures in a timely manner according to changes in the situation to prevent the spread of local risks.

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