Way of the financial technology regulatory landscape

What risk signals have been released?

“What is meant by’big to fail’? That is, for systemically important financial institutions, the regulatory authorities dare not let them go bankrupt easily. In this case, moral hazard will arise.” Zeng Gang said.

not to fail

Before the 2008 financial crisis, “big not  to fail” was just an unspoken rule. On September 15, 2008, the collapse of Lehman Brothers, an investment bank with a history of more than 150 years in the United States, triggered a major earthquake in the global financial market, turning the subprime mortgage crisis into the most serious global financial crisis since the Great Depression in 1929. These experiences have become the reason for many politicians and non-financial people to ask for bailout of large financial institutions, that is, “too big to fail”.

However, with the “big to fail” is the breeding of moral hazard and the greater risks created by it. Zeng Gang further explained that the essence of the “big to fail” problem is that the creditors and shareholders of large institutions believe that large institutions will receive government assistance and will not go bankrupt. As a result, they will relax their prudential management of the organization, and instead engage in some high-risk businesses, over-development and over-taking of risks.

At present, particularly noteworthy risks are mainly concentrated in two aspects. On the one hand, these new financial infrastructures developed with the development of the new economy do not hold corresponding financial licenses or even if they hold licenses, they are engaged in certain businesses beyond the scope of the license. , Outside the scope of supervision, the regulatory vacuum leads to the emergence of arbitrage opportunities, which can easily distort the market. On the other hand, the mixed operation of large technology companies does not only occur across borders between financial institutions, but also forms a cross-border relationship with the real economy. The mixed operation situation is more prominent, resulting in stronger spillovers of potential risks, and it has a greater impact on the entity. The economic impact is more direct.

“In addition, the phenomenon of being outside the scope of supervision will also lead to unfair market competition. Those technology companies that are engaged in the same financial business as banks are not subject to the same regulatory constraints as banks. They get more and pay less. Other institutions are very unfair, which can easily disrupt the market order, leading to misallocation of resources and distortion of prices.” Zeng Gang cited small loan companies as an example. In fact, the consumer credit business of small loan companies is essentially the bank’s Credit card business, but it is not subject to the same supervision of access, collection and pricing as bank credit card business.

Wang Yifeng emphasized that it is different from the traditional financial institution’s “big to fail”. The platform-based technology company faces a large number of C-end customers, and it is easy to form a natural monopoly and a “winner takes all” situation. From a perspective, there is also the risk of “big to fail”.

Where will the financial technology regulatory landscape go?

After the subprime mortgage crisis in the United States, in order to solve the problem of “big to fail”, Basel III proposed higher capital adequacy requirements, leverage requirements, corporate governance requirements, and stricter related party transactions for global systemically important financial institutions And information disclosure requirements. “In fact, the purpose of supervision is, on the one hand, to control the possibility of excessive risk taking in advance, and to restrict the emergence of’large to fail’ risks in advance; on the other hand, through the’living will’, that is, the recovery and disposal plan, Make relevant arrangements in advance so that large institutions can rely on themselves to solve spillover risks, minimize the use of public resources, and prevent the whole society from paying for their imprudent operations.” Zeng Gang said that the next improvement of technology companies’ supervision methods may continue. This regulatory idea.

Two experts, Zeng Gang and Wang Yifeng, unanimously emphasized the “full coverage” and “consistency” of financial technology supervision in the future.

“Those businesses that are outside the regulatory system must be included in the regulatory system. Those that are already in the regulatory system but do not hold the corresponding financial business licenses must’level out’ the supervision and do the same with banking financial institutions. We must accept the same supervision.” Zeng Gang emphasized.

“To resolve the risk of financial technology giants being’big to fail’, it is imperative to keep in mind that the essence of financial technology is still finance, and to serve the real economy as the starting point and goal of developing financial technology, improve the quality and effectiveness of financial services, and promote social welfare. , Through financial innovation to benefit the development of people’s livelihood.” Wang Yifeng believes that it is necessary to strengthen the supervision of financial technology giants, distinguish between technology business and financial business, find a regulatory method that adapts to the characteristics of large technology companies, and enhance the penetration, timeliness and coordination of supervision , Pay attention to the use of regulatory technology, prospectively evaluate the safety of financial technology innovation, not only reserve enough flexibility for the market, but also avoid “pseudo-innovation” characteristic of regulatory arbitrage. For businesses with clear essential characteristics and larger scales, they will unify regulation and level supervision as soon as possible, and enhance the consistency of supervision.

In fact, supervision is now in the process of precise bomb disposal. Since the beginning of this year, the “Trial Measures for the Supervision and Administration of Financial Holding Companies” have been implemented, filling the regulatory gap for financial holding companies. At the same time, management measures for various financial technology businesses are being released, such as the “Interim Measures for the Management of Online Small Loans Business” for comments. In terms of data, the “Personal Financial Information (Data) Protection Trial Measures” has also been included in the work schedule of the central bank this year.

At present, my country has established a regulatory framework in areas such as global systemically important banks. The industry expects that financial supervision in the field of financial technology will achieve full coverage. “The 14th Five-Year Plan proposes to properly handle the relationship between financial development, financial stability, and financial security. If you want to maintain the bottom line of systemic risk, you must keep systemically important institutions into the scope of supervision without leaving blind spots. “Zeng Gang said.

It is foreseeable that under the trend that all financial businesses must be regulated, the regulatory requirements of financial technology companies and traditional financial institutions are also expected to stand on the same starting line. In the future, the competition will be based on compliance and serve the real economy through innovation. ability.

1 Response

  1. Everly says:

    It is past time to change the traditional service mode and customer acquisition mode through the Internet. At present, the marginal penetration capacity and space of the network are shrinking, and the traditional Internet economy is entering the later period of prosperity.

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