China's financial security has caused worries

As of the end of 2013, China's broad money (M2) balance was 110.7 trillion yuan, ranking first in the world; while China's foreign exchange reserves reached 3.82 trillion U.S. dollars, has become the first of many countries; banking financial institutions Total assets now up to 151.35 trillion yuan, this result can be proud of the world. If only from the index point of view, it seems that China has become a financial power, but if from a financial security point of view, then China is not actually a financial powerhouse. With the internationalization of the renminbi, how to protect the security of global payments and renminbi? With the business and people "going out", how should the state to protect their investment and asset safety? With China's growing role in global economic development, how can we safeguard our financial discourse power? These questions directly question China's current financial security system. However, compared with the European and American countries, we have not less differences in many fields of finance. There is a rather obvious "weakness," and we still need to work hard to become a financial power.

"Three weaknesses" perspective financial security risks

In my opinion, at present, cross-border transactions and global asset custody, payment and settlement, and credit rating are the "three weaknesses" that are currently quite prominent in our financial system. In these weaknesses, we can not overlook the safety Hidden trouble.

First, there is no strong dominance over cross-border transactions and payment and settlement. The "aorta" of financial modernization and internationalization is an effective system of investment transactions and payment and settlement that radiates the globe. At present, China lags behind other fields such as payment and settlement of cross-border RMB payments, settlement and settlement of cross-border bank cards, overseas investment transactions and information services, and lacks a strong dominant power. This is reflected in:

First, China lacks a core cross-border payment and settlement system and relies too much on SWIFT. The world's major economies have established a core cross-border payment and settlement system to support their own currencies, such as CHIPS in the United States, TARGET2 in Europe, Japan's FXYCS, the United Kingdom CHAPS, etc., while most of the global system of cross-border access and reporting Text delivery mainly uses the services provided by the SWIFT organization. According to the "European and American Finance Tracking Project Agreement," the SWIFT organization submitted its financial payment message to the U.S. Department of the Treasury starting from August 2010, which threatens member countries' cross-border payment settlement and data security.

In contrast, in China, the current cross-border renminbi business is implemented mainly through the CNAPS system in the liquidation and agency modes. However, the system itself is a domestic RMB clearing system with problems of insufficient processing capacity and time difference. Its service capabilities are closely related to China's international trade and The demand of Chinese-funded enterprises to "go global" does not match. China's proposed cross-border RMB payment system (CIPS) has not yet been completed. Even if it is completed, the system relies on the SWIFT organization to carry out cross-border message delivery. The financial information and communication links are severely restricted and there is a big security risk. In the event of a dispute, It is hard to avoid similar experiences at Iranian banks.

Second, cross-border bank card spending liquidation led by VISA and MASTER. At present, VISA and MASTER are the two international bank card organizations with the most customers, the largest issuance volume and the most extensive coverage, all of which are American companies. Since China's accession to the WTO, the two companies have made every effort to enter the Chinese market. On August 31, 2012, Visa even obtained the right to issue RMB payment cards in China with the support of the WTO and further strengthened its penetration of the Chinese market.

China Union Pay is the only bank card clearing organization in China. Although its international market has begun to emerge, its international competitiveness is far behind that of its strong network edge and mature data analysis capabilities. Especially due to the lagging construction of overseas networks, CUP cards basically rely on the cross-border liquidation of foreign commercial network systems or through the issuance of bank cards with VISA and MASTER logos to achieve consumer settlement. This domineering situation can easily lead to similar problems in Russia's bank card incident during the crisis in Ukraine.

Thirdly, overseas investment transactions and information consulting services are monopolized by Blomberg and Retures. Recently, with the escalation of the game between China and the United States in the field of information security, the Chinese government has started to pay attention to the monopoly position of IBM servers in the financial sector such as banks. In fact, the hidden dangers of BLomberg and Retures in the financial field of our country can not be ignored .

From Blomberg in the United States and Retures in the UK, its core businesses are transaction management and information services and have a global monopoly. As early as a dozen years ago, the two giants stepped up their infiltration of China's financial system. At present, they have basically monopolized the information service system of major financial institutions and the overseas investment and trading system. Under such circumstances, it is unknown whether it will affect the transaction by providing propensity information or even revealing the actual financial information. In fact, in recent years, Blomberg and Retures often have some incitement to political information in the information, has long been a hidden danger.

Second, the custody of overseas financial assets is mainly controlled by foreign banks. Asset custody business will not only involve investment quotas, varieties and other trade secrets, but more importantly, it involves issues of asset regulation and safety, payment and management of funds, and so is of great concern. Currently, the global custodial market is dominated by the U.S. banks with a high degree of market concentration. Only BNY Mellon achieved an asset trusteeship of 26.3 trillion U.S. dollars in the first quarter of 2013. Although the asset custody business in our country has been developed to a certain extent, the total size of the domestic banking assets custody over the same period is only about 5 trillion U.S. dollars. The overseas custody business is still in its infancy with a clear gap.

For a long time, China's overseas financial assets are mainly managed by foreign banks. This makes our country a large number of foreign investment information is controlled by foreign banks, is not conducive to the national financial information security, and in the event of political, military and other issues affecting national security, foreign banks can neutralize and independently fulfill their custody obligations, it is questionable.

Third, the credit rating is basically monopolized and controlled by U.S. agencies. Credit rating is a special intermediary service in the financial system. It constructs a model to evaluate the risk of debt repayments of enterprises and governments to guide financial investment and economic decision-making, which affects the stability of asset prices and financial markets in a country, and even affects the national security.

Moody's, Standard & Poor's and Fitch three major US credit rating agencies, the international financial services system in the long-term monopoly, have the absolute right to speak, but the rating model is strictly confidential, the ratings of independence and objectivity doubt. From the euro crisis and the crisis in Dubai to the global financial crisis, we can easily find out that these three major agencies can easily become instruments of U.S. financial hegemony and serve the interests of the United States.

The three major credit rating agencies have also been to depress China's credit rating for a long time. Even shortly before the outbreak of the Greek debt crisis, China and Greece have been given the same credit rating, which directly increases the difficulty of China's bond market and overseas fund-raising. In recent years, the three major agencies have been active in our country. In particular, they have continuously deepened their control over the credit rating market in our country by participating in the debt financing rating of key industries or key enterprises in our country. The degree of national strategic attempt.

The development of China's credit rating agencies started very late. At present, only a large national rating agencies such as Dagong, Honest, Joint, and Shanghai New Century have emerged. Since 2006, the three major credit rating agencies of the United States have gradually infiltrated or even controlled China Credit Suisse, Shanghai Far East, United Credit, and Shanghai New Century through equity acquisition and strategic cooperation, thus achieving control over China's credit rating core market. On the contrary, access to foreign credit rating agencies in the U.S. domestic market is very harsh.

Comprehensive policy to build financial security system

The construction of cross-border payment and settlement, global asset custody and credit rating system, to consolidate financial security, the need for comprehensive policy.

First, we must strengthen the top-level design to achieve both financial development and financial security. On the road to achieving financial power, we should not pursue the speed and scale of the one-sidedness. Both financial development and financial security should be taken into consideration. We should attach importance to and strengthen the top-level design. We must aim at planning and stage up the weaknesses of finance in phases and build a foundation of security.

Second, focus on resource co-ordination, government-led and bank participation and construction. The government plays a leading role in the construction of cross-border payment and settlement, global asset custody and credit rating. At the same time, the government should lay emphasis on relying on the existing development foundation of commercial banks and other financial institutions.

After long-term efforts, an international network of financial institutions such as Bank of China and Industrial and Commercial Bank of China has gradually taken shape. In particular, the bank's global cross-border fund clearing and operation system has also been initially established to begin carrying cross-border banking transactions and global asset custody business. Depending on these foundations, multiple approaches can be considered. Before the CIPS system led by the People's Bank of China is completed, the eligible commercial banks can be encouraged to develop their own systems at the same time. On the basis of this, the People's Bank of China will co-ordinate the formation of the equity or membership structure design, standard setting and system networking Several cross-border payment and settlement, bank card transactions and global asset custody of the operating path, and eventually into the government-led unified management system. These foundations can also be leveraged to independently develop Chinese payment messaging systems to gradually reduce reliance on SWIFT organizations and to foster organizations and standards that can compete with them even when conditions are ripe.

Third, vigorously support domestic-made and realize the combination of technology import and domestic use. Since the 18th CPC National Congress, Chairman Xi actively advocated the support of domestic products and the use of domestic products. In the financial field, we should also strongly advocate this concept. To guide enterprises and individuals to give priority to the use of domestic financial services, even in some strategic areas, the government can make mandatory provisions for the use of domestic financial services. Although there is indeed a gap in the service level of domestic financial services in some areas compared with the international advanced level, the more so, the more we should support it so that it can catch up as soon as possible. For example, it may stipulate that the custody of overseas investment in our country should give priority to the use of the global custody service provided by a Chinese-funded bank or the primary and secondary custody services provided by it at home and abroad. For another example, overseas bonds issued by a Chinese-funded enterprise may at least require that international rating agencies and domestic rating agencies At the same time such as rating.

Fourth, focus on the superior forces to achieve universal promotion and key support in parallel. Financial institutions are special tools for national competition in the 21st century. Western countries are accustomed to supporting key enterprises to control specific financial areas, thereby affecting other countries. We need to focus on supporting a group of Chinese-funded institutions with global influence based on the general promotion of financial competitiveness. Among them, China should rely on existing commercial banks to develop cross-border bank card clearing houses with more independent brands so as to create "the second UnionPay" and "the third UnionPay" and further control the market and obtain the financial discourse right while activating market competition. In addition, the proportion of foreign equity in domestic credit rating agencies should be strictly controlled, the scope of business of foreign-funded institutions should be clearly restricted, and the support for national credit rating agencies should be strengthened. As a result, Even the more extensive consolidation of developing countries may be considered as a global credit rating agency that can compete with the three major U.S. rating agencies.

(Li Xiaopeng, former chief supervisor of China Investment Corporation, vice president of China Industrial and Commercial Bank of China, now general manager of China Merchants Group, Xie Gang, the working unit is the Commercial Bank of China, the head office of investment banking.)