"Equilibrium is broken" triggered the financial crisis

In the actual financial supervision of life, financial innovation has always been in front of financial supervision, and regulators have also been dealing with the "tube" and "release" relationship. Should be more focused on ex ante and ex post regulation, "in advance" to establish a living will, etc., "after the event" will be the introduction of the withdrawal mechanism. The current rapid development of Internet finance, regulators clearly can not control every component should be left with a breakthrough and space for development and innovation.

"Equilibrium is broken" triggered the financial crisis

Beijing News: You study financial regulation for many years, in your opinion, why do you need financial regulation?

Yin Zhentao: In order to prevent financial risks as much as possible and to regulate financial innovation. At the same time, try to find and solve the crisis as much as possible.

Beijing News: Financial crisis, financial regulation and financial innovation What is the relationship between the three?

Yin Zhentao: The three can be described as a community and a triangle that constantly seeks a stable balance. They are not antagonistic relations, but need to establish an internal balance and common goal of making the financial industry healthy and sustainable development.

Beijing News: Under what circumstances, the financial crisis will happen?

Yin Zhentao: No crisis, the financial crisis, financial regulation and financial innovation is a balanced relationship, and only when the equilibrium is broken, the financial crisis will happen. If the equilibrium is broken, such as over-regulated or over-regulated, there is no innovation or over-innovation, the balance will move from wave peak to trough, and a financial crisis will occur.

Beijing News: Please specify.

Yin Zhentao: Prior to the 2008 subprime mortgage crisis in the United States, each financial product was in compliance with regulatory policies. However, due to excessive financial innovation, it provided excessive financial services to ordinary financial consumers, for example, the consumer did not have any collateral or necessary Loan repayment ability, but still can enjoy large loans, the balance between supervision and innovation was broken, and eventually triggered the subprime mortgage crisis.

Beijing News: 2008 US subprime mortgage crisis, the financial regulation of any new changes?

Yin Zhentao: After the subprime mortgage crisis in the United States, regulators around the world are stepping up their supervision and there are several new changes. First of all, the regulatory concept from the main protection of financial institutions to protect financial consumers. The United States and other countries have set up specialized financial consumer protection bureau.

Second, pay more attention to ex ante and ex post regulation by paying more attention to routine risk prevention. For example, data sharing and early warning system, living wills and other policies promulgated.

In addition, the regulatory principles are also changed from micro-prudential regulation to macro-prudential regulation. For example, the macro-prudential management framework proposed after the crisis and the institutional importance of institutional management ideas.

Expected to be the fastest deposit insurance system

Beijing News: Financial crisis can be avoided?

Yin Zhentao: My point is that the financial crisis will always be inevitable. How to find out the crisis is a question that needs thinking.

Beijing News: Since the financial crisis is inevitable, then the financial regulatory how to maximize the discovery and resolution of the crisis?

Yin Zhentao: Many regulatory policies in the United States used to avoid the financial crisis. In fact, after the financial crisis in 2008, many long-term policies issued by the United States show that regulators pay more attention to how to find out and find solutions to the crisis. This is a big change. Since the financial crisis is inevitable, the most important thing now is regulation in advance and afterwards.

Beijing News: Regulators should pay attention to pre-emptive supervision?

Yin Zhentao: After the financial crisis in 2008, financial institutions including the Federal Reserve and Wall Street did not know what to do. They can not agree on a timely solution to the problem. Even when the Fed decides to inject capital, it will also need to consider whether the measures are in compliance with laws and regulations and regulatory requirements.

It is imperative to introduce living wills to list in advance all kinds of worst intentions, including various bad situations such as bankruptcy. Then, design a holistic plan and get the approval of regulators and shareholders. When the crisis really happens, it can be solved quickly and effectively. This is to "arrange your own funeral when you are alive."

Beijing News: Will the living arrangements in China is also being implemented?

Yin Zhentao: At present, we have not yet established a perfect living testament system, but regulators have recognized its importance and started the pilot work. For example, China Banking Regulatory Commission issued a document in January this year, requiring systemically important banks to formulate recovery and disposal plans, while some joint-stock commercial banks are also actively responding.

Beijing News: China Banking Regulatory Commission introduced a living will, does that mean the banking industry is at risk?

Yin Zhentao: Obviously not. If it is really going to happen or the CBRC will not feel comfortable with the big banks, it will not immediately launch a living testament. On the contrary, the regulators are relieved about the banking industry. Therefore, living testaments will be introduced from several major banks and will be gradually promoted in the future.

Beijing News: With the living testament the most important job is what?

Yin Zhentao: The most important thing is the exit mechanism of financial institutions and deposit insurance system. This is a systematic exercise. Without the living testament and deposit insurance system, we can not allow financial institutions to withdraw. The deposit insurance system is expected to be the fastest possible launch, the next step may be the bankruptcy regulations of financial institutions, and financial institutions themselves to make living wills.

Beijing News: This is equivalent to open the export.

Yin Zhentao: Allowing private capital to set up a bank now actually opens the door. Well, the corresponding exit should also be opened. Incoming and outgoing will form a sustainable market.

The introduction of the Internet Financial Regulation Act inappropriate

Beijing News: You say financial regulation and financial innovation should be balanced, that regulation how to handle "control" and "release" problem?

Yin Zhentao: The most stringent financial regulation may not be the best regulation. We can not manage every component of a financial institution and leave innovative breakthroughs and space for the development of the financial industry. Otherwise, how to innovate and develop the financial industry?

Beijing News: What areas are the breakthrough?

Yin Zhentao: Internet finance is one. Internet finance in China is not much later than the United States. There are many models for Internet banking. For example, the emergence of "baby groups" such as Yuen Po since 2013, P2P and crowdfunding are all new financial models.

Beijing News: Some analysts pointed out that Internet finance has not changed the nature of finance, hard to call innovation.

Yin Zhentao: This should be divided into two aspects, if there is no innovation in Internet finance, it is because whether it is P2P, crowdfunding, or a variety of "baby" products are essentially financing mechanism, did not change the essence of finance . However, on the other hand, Internet finance uses completely different channels or technologies from traditional finance and can be called innovation.

Beijing News: Internet finance need to be regulated?

Yin Zhentao: This question should be answered in two levels.

First, Internet finance has not changed the essence of finance. Therefore, Internet finance still needs financial regulation.

Second, the emergence of Internet finance, do not have to introduce a new regulatory system. In fact, many Internet financial models or products can find the corresponding focal departments under the current financial regulatory framework. For example, Yu Bao Po's operating mechanism behind the bank supervision, securities supervision and payment and settlement system and other monitoring.

Thirdly, of course, due to the characteristics of Internet finance, it has indeed increased the difficulty of financial regulation and requires the rescheduling or layout of regulatory measures.

Beijing News: Internet finance increased regulatory difficulty? How to regulate?

YIN Zhen-tao: Internet finance is still under development and what kind of development can be made in the future. Judgment can not be made now. Therefore, I think the regulators should adopt a positive attitude and do not over-regulate.

Some time ago it was suggested that the regulatory authorities to introduce an Internet financial regulatory act, I think this is not appropriate. Because of the industry's prospects have not yet seen, how to regulate it? In case the laws and regulations have not been formally promulgated, some regulated internet financial products no longer exist? It is entirely possible. At the same time, Internet finance has many manifestations and can not be generalized. For example, Yu Bo and P2P are different, if you want to supervise, then the rules will certainly be different.

P2P should emphasize "pre-regulatory"

Beijing News: Some time ago P2P companies appear to runway and other phenomena, is the regulators to let it go?

Yin Zhentao: Some P2P companies suck up to establish a capital pool, illegal, but, P2P has indeed solved the problem of many small businesses. Therefore, for P2P regulatory issues, can not be killed in a stick, but should regulate its healthy development. And should emphasize the prior supervision, rather than waiting for P2P business owners to run, regulators came forward to deal with.

Beijing News: How to avoid post-regulation?

Yin Zhentao: To be registered in advance, including data statistics and information disclosure. For example, how many P2P companies in the country? I guess no one knows. In fact, in the establishment of P2P companies, it is necessary to register to the appropriate department. At the same time, it is necessary to clearly define what business needs information disclosure, which requires a clear definition and rules.

Internet financial regulation, from the institutional framework to straighten out, clear regulation, there will be no such unmanaged question. Internet finance because of different means of operation, and some registered in the business sector, some in the financial regulatory filing, likely to create a regulatory vacuum. Often times when there is no crisis, the supervisory agencies push aside one glance at one eye. No one wants to manage when a mess happens.

Beijing News: Internet finance how to manage?

Yin Zhentao: Internet financial enterprises in the end is a financial institution, or belong to ordinary business, which is not easy to answer a question. Therefore, to classify the existing Internet financial models and characteristics, which should be managed by the financial regulatory authorities and which ones should be managed by other departments, an agreement should be reached.

At the same time, we must not only play the role of a financial regulator but also play a role as a local financial authority. Regulatory powers have been delegated to localities, and local financial authorities also have to assume certain regulatory functions.

In addition, from a legal point of view, many cases can in fact be solved entirely by the legal system, and the regulatory agencies can do a good job of obtaining evidence and cooperating with them.

There is a regulatory vacuum for separation regulation

Beijing News: Why China's financial regulation is a pattern of three lines?

Yin Zhentao: China used to be a unified supervisory model. With the development of the financial industry, it gradually formed the current supervisory model. This is a gradual process and a natural choice consistent with the law of economic development.

Beijing News: What are the advantages and disadvantages of separation regulation?

YIN Zhen-tao: separate supervision of a stand, more professional. At the same time, regulation is more efficient and targeted. However, there is also a dispute of interest between the three parties and the regulatory authorities. As the financial market changes, this model also reveals some problems.

The biggest problem is the regulatory vacuum and the arbitrage of the separation regulation. For some nascent financial formats, there is a regulatory vacuum because of the division of departments. In addition, for some well-developed industries or businesses, regulators also want a piece of cake. For example, the corporate bond market, "Kowloon flood control" phenomenon.

Beijing News: How to avoid regulatory vacuum and regulatory arbitrage?

Yin Zhentao: In the event of a dispute over sectoral interests, it is imperative to strengthen supervision and coordination, including coordination among financial regulators and regulatory policies, so as to avoid regulatory costs and inefficiencies.

Beijing News: How to strengthen regulatory coordination?

Yin Zhentao: At present, the State Council has approved the establishment of an inter-ministerial joint conference system for financial supervision and coordination. However, to truly achieve coordination under separate supervision, an entity department, such as the establishment of a financial regulatory safety committee, must be set up. And there is a permanent secretariat or substantive agency, with a set of mechanisms and operational processes that can truly play a coordinating role. At the same time, financial regulation should be fine-tuned and gradually tilted toward functional supervision. Not to financial institutions but based on financial behavior, to determine the regulatory body.

Beijing News: Can you give an example?

Yin Zhentao: For example, the issue of corporate bonds. Development and Reform Commission should retain the right to approve the issuance of corporate bonds? I think it should be canceled. Then the CBRC or the SFC approval, according to different forms of bonds, market flows, judging from the function.

Beijing News reporter Jin