Thursday, October 1, 2015

Zhou Wan word detailing China s financial reform is delayed to timely lessons

"Editor's note"

On October 1, the latest issue of China finance magazine Vice President Zhou xiaochuan, Governor of the members of the National Committee of the CPPCC held in Beijing on May 27 this year to learn learning lecture lecture-cum-cadres of the political consultative conference series speech.

Long speech nearly Word, provides an overview of the development of China's financial reform process, during the 1997 Asian financial crisis and the 2008 global financial crisis, and expounded China's financial reform and development of internal logic.

Zhou xiaochuan said financial reform and opening up, China has a strong logic: early in the transition, you need health, standardization and specialization and a series of penetrating and powerful adjustment, can we gradually towards a market-oriented, internationalization and diversification stage.

In view of the current situation, Zhou said, "today we have the conditions to promote the reform of marketization and internationalization and diversification, but in the process, there are also individual content that requires remedial. Because some of the changes were going to do in the past, but due to the crisis, such as a variety of reasons, has been delayed. "

In this paper, Mr Zhou also points out the need to "catch-up", including the establishment of a preliminary framework of the deposit insurance system and promote the reform of policy banks.

Zhou pointed out that will be found in international comparison, reform and development of financial systems in transition economies are bound to face several difficulties. Without strong measures, not resolve, not clean up the unhealthy financial problems, without introducing the rules of market economy, the banking system will be difficult to survive. "If China is not after a series of financial restructuring, promoting healthy, standardization marketing and probably national banking system does not hold water. "

The following is the full text:

Review of China's financial reform and development history

In the 1980 of the 20th century: the introduction of basic structure of the economic and financial system market

Zhou xiaochuan. CFP information

In the 1980 of the 20th century is China's economic transition to a market economy in the early days of main task of area financial market reform was the introduction of the basic structure of the economic and financial system market.

Before in the 1980 of the 20th century the era of the planned economy, China's "unification" of the financial system, only the people's Bank. When the financial system is the most obvious characteristic is, people's Bank tube macro balance, providing commercial finance services. 80 a key element of financial reform is to change the structure of the financial system, through the establishment of new financial institutions, central banks and commercial financial separation, to construct a so-called two-tier banking system. In this system, focusing on macro-control of the Central Bank, financial regulation and to payment clearing banks and other financial services, commercial financial institutions independent from the people's Bank, commercial financial services for businesses and residents. In particular, the commercial bank of China, China Construction Bank, Bank of China, the agricultural Bank of China and the people's insurance company is to establish or restore the establishment before and after in the 1980 of the 20th century. Past service of China Construction Bank in the financial function is actually prior to the re-establishment of Bank of China people's Bank within the International Bureau (foreign and hung a sign), ABC was a false sign; covered by insurance company used to do only the import and export of cargo insurance, is under the people's banks and finance institutions.

Meanwhile, the 80 was also exploring securities trading. Didn't set up a stock exchange, late 80 's pilot conducted securities transactions on individual securities.

Second, in the 1990 of the 20th century and during the first half of the medium-term: establish the basic framework of market economy needs the financial institutions and financial markets

In the 1990 of the 20th century and during the first half of the medium-term, financial reform and development under the third party's 14 and 14 session, parallel with the basic framework of countries began to establish a socialist market economy, the main feature is the fundamental framework for a market economy, financial markets and organizational structures.

First is the Bank turned to commercial banks. At that time, the industrial and commercial bank of China, the agricultural Bank of China, China Construction Bank four major State-owned bank and Bank of communications have been established, but in the big four Bank, respectively, serve the industrial, agriculture, international business and the construction industry or field projects, without adequate competition to each other. This is obviously not in line with the basic characteristics of a competitive market economy, and it's difficult to regulate. And, if the requirements of the national policy in a particular area, such as no wages made by the enterprise, the State asked for support, then four lines must also be responsible for its own policies in the field of business. This is not only not conducive to the development of banking, are not conducive to the healthy development of the market under the Socialist market economy. Based on this consideration, in 1993 the 14 session of the Party decided to set up three policy banks, the National Development Bank, the export-import Bank, agricultural development Bank of China, specifically responsible for policy service, only four rows of commercial business, while four lines are no longer divided by field operations, can overlap, compete with each other in order to improve the service.

Change is another important background of specialized banks to commercial banks, the 14 session of the Party proposed to establish a modern enterprise system in State-owned enterprises, established ownership, well defined power and responsibility, separation of, scientific management for the company's organizational structure and the basic characteristics of initial governance framework. There was a problem, if it also applies to the modern enterprise system in large State-owned banks, the major banks like the State-owned enterprise reform, according to the modern enterprise system and changed the nature of specialized banks, market competitive and management under the modern enterprise system.

Secondly, the securities market was established during this period. The end of 1990, the Shanghai Stock Exchange and Shenzhen Stock Exchange established, set up a Securities Committee and the Commission at the national level, subsequently merged into the Securities Commission issued auditing Commission.

Again, made rapid development of insurance, especially life insurance preliminary development began. In 1998, set up a China insurance regulatory Commission.

Finally, based on the reform and development of financial institutions and financial markets, established a new framework for macro-control, clear the respective functions of the State Development Planning Commission, fiscal policy, monetary policy, macro-economic control shifted from direct control to speed up indirect regulation.

During the Asian financial crisis: consolidation and its impact

Thailand started having problems in the first half of 1997, to the more obvious signs of the financial crisis in the second half. Impact of the Asian financial turmoil on the Chinese 4-5 of time. During the Asian financial turmoil, China's financial sector is an important task for financial consolidation. Early in establishing a socialist market economic system, there is a lot of confusion in the financial sector. In particular, because of the accounting standard does not establish, not scientific classification methods of commercial bank loans, financial discipline is not standardized, capital is not sufficient, under the influence of the financial turmoil in Asia, and quite a few financial institutions anymore, or even shut down bankrupt Canton State event was the most important case.

In addition, in response to the impact of the Asian financial turmoil, and to adjust the structure of the financial system. As far as the economic system as a whole, need to be on the basis of appropriate decentralization, establish a reasonable relationship between Central and local government, but in the area of financial control, vertical management is required. Thus, in 1997 the organizational structure of the national financial work Conference of the financial system has been adjusted.

Again, industry cooperate with the country to recover the significant impact of the Asian financial turmoil. In response to the crisis, was launched mainly to infrastructure stimulus, fiscal and financial sector has to cope with such work. At this stage the most important task is to bail out State-owned enterprises. Affected by the Asian financial turmoil, obvious difficulties of State-owned enterprises, the national launch of State-owned enterprises, "three years off the hook". In fact, when banking is also very difficult, probably bad assets in 25%~45%, losses are very large. But State-owned enterprises involving more people jobs, issue more urgent. Thus, alleviating the debt burden of State-owned enterprises through debt-equity swap, setting up four asset management companies stripped of large banks ' bad assets, helping state-owned enterprises to recuperate out of the Asian financial turmoil has brought massive layoffs and falling benefits dilemma. These measures are in fact greater loss is borne by the financial system, and other State-owned enterprises has improved, the financial industry has to go back and clean up the legacy of the financial problems.

2002-2008 financial reform and development: health, standardization and specialization

From about the second half of 2002, out of the Asian financial turmoil began, China's financial reform and development have entered a new stage. Personally think that this phase of financial reforms the main content can be grouped into health and development, standardization and specialization.

About health and standardization. Many reforms are both healthy, and standardization. Affected by the Asian financial turmoil, has accumulated a lot of problems in the banking system, many bad assets, lack of capital. Stock market fluctuations, overall low quality of listed companies, issuing and trading order is chaotic. Insurance company principal life insurance company in a large spread loss, when high inflation, high interest rates, insurance product reference banks promise of curing yields a very high interest rate, and lower inflation and interest rates decline, lower real rate of return of funds of insurance companies, there will be huge profit loss. Therefore, the insurance company's financial situation is very unhealthy.

After the Asian financial crisis, you need to have an impact on financial institutions, in particular the financial restructuring of large financial institutions, to restore it to a healthy state. To carry out financial restructuring, you need to figure out the quality of assets, Chief among them is the reform of accounting standards. Banks ' financial health is sensitive to accounting, balance sheet is healthy or not, to a large extent depend on the accounting system used. Although the accounting system of the planned economy has changed before, but not thorough enough. Losses cannot be write-downs of assets and make, for example, inventory losses or losses on an investment project, cannot be made. In this way, banks towards corporate lending quality measurement and calculation of bad assets is not true. Listed company as well. Announcements of listed companies ' profitability, but because the losses have not fully made, data is not real, and also can have negative impact on capital markets. In 2001 and 2002, the accounting standard was improved. This is a very substantive, foundational work.

For the banks, loan classification unreasonable in the past, lots of bad assets to be covered up, by applying the five-tier loan classification system, you can find out the real situation of the banks ' bad assets, so find out the family. Ascertain nonperforming loans on the basis of, you can identify the bad assets need to peel, banks need to add new capital. Then, the nation will find a way to inject. When practice is to take part in resources to recapitalize the financial system and financial, including foreign currency reserves and gold holdings to improve large Bank and insurance company's capital position, part of the securities firm's capital position was subsequently improved, these financial institutions basic qualification.

After passing the financial position of financial institutions, in order to keep pace with the rapid development of the national economy, you also need to increase capital. Therefore, most of the benefits of good banks, insurance companies, and securities issuance and listing of the company gradually into listed companies. In addition to raise capital, and more importantly, to establish a corporate governance structure according to the modern enterprise system, while increasing transparency, financial institutions from the vast number of investors, particularly stock market investors and strategic investor pressure and supervision, so as to have enough momentum to strengthen financial and risk management.

In the meantime, another important financial reform is the reform of rural credit cooperatives. Rural credit cooperatives ' assets probably accounted for about 10% of the total amount of the financial system, when troubled assets accounted for around 50%, is very high. Reform of rural credit cooperatives used a similar approach with the former large State-owned bank. Meanwhile, rural credit cooperatives are scattered, uneven, they design a positive incentive mechanisms, mobilize enthusiasm and encourages does well, constraints do badly.

Pay special attention to large financial institutions and reform of rural credit cooperatives at the same time, using the same idea, but at your own financial loss as the principle to promote secondary financial institutions, including the moderate reform of commercial banks and city commercial banks. After the reform, quite a few good financial institutions have become listed companies.

This stage also vigorously promote the standardization of the stock market. Persistent share-trading in China stock market, shares of listed State-owned enterprises and State-owned share circulation unit, part of State-owned shares of corporate shares, legal persons cannot be circulated on the market, forming a two-track system. Reform of split share structure is a phenomenon unique to China during the period of transition, is not standard, has affected investor confidence and the stock market's further development. In 2005, the national determination to promote the reform of split share structure to solve this is not standard issue.

Thus, the process covers a variety of financial institutions, including banks, securities and insurance institutions, as well as the different levels such as large, medium and small. Similar reform logical relations and principles, so that different areas and at different levels there's a definite link between the reform of financial institutions. The reform of Chinese financial system lays the Foundation of the successful response to the 2008 global financial crisis.

On the specialization. Specialization refers to the financial industry in greater depth according to the law of market economy to operate while financial regulation further towards professionalism. In 2003, the CBRC split from people's Bank, clearly the CBRC, CSRC and CIRC three major regulatory objectives, clarify responsibility for financial supervision and macro-control relationship. Meanwhile, financial regulators focus on the talents, monitoring has been improved significantly.

Response to the global financial crisis: keep pace with the reform of global financial governance

Health, standardization and specialization of these phases has not been fully completed, with the September 2008 collapse of Lehman Brothers triggered a global financial crisis, China's financial reform and development have entered a new stage. At this stage the financial sector's main job is to coordinate the national response to the global financial crisis, especially with the November 2008 launch of economic stimulus packages, in macroeconomic policy and financial support to a number of structural policies are reflected.

During this period an important part of the international financial sector reform, is a response to the global financial crisis poses major challenges to macro-control and the financial system, in the heavily corrected and marked improvement in the financial sector. Main including: for led to financial crisis occurred of problem, like capital not sufficient, and lever rate high, and derivative products market chaos (crisis Qian, United States of financial derivative products market too complex huge, many situation United States regulatory authorities are make not clear), be corrected, on related market for transformation, especially strengthening has on financial system in the trading sector lever rate of regulatory, increased financial stable measures, on liquidation system take trading opponents party concentrated liquidation. An important element of which is to establish a sound macro-prudential regulatory framework. The global financial crisis has exposed the procyclicality of the financial system, there's a very clear, that is, when the economic situation is good, we all feel good, rating comments well, high stock price, borrowing high leverage rate; if there is a crisis, the above links appear to tighten, "slip". Clockwise-cycle factors increase economic and financial volatility and crisis. Therefore, we need to introduce counter-cyclical elements in the financial system, let it cool a cold when the economy was good, bad time to lend a helping hand. These measures were named the concept of "macro-prudential policy framework". The reference at the international level are written to the G20, was written into the party's 18 in the country, 18 session file, and also wrote for several years into the Government work report.

In short, international introduced many reforms in the financial sector, which is great for our reference and inspiration. First appeared on the international experience, we are also very impressed. In 2008, before the global financial crisis, there are many problems in the field of Economics and finance, sharp decline in late 2008 and early 2009 the same, just a matter of us not United States, Europe, and so fell less hard. Second, some belonging to the developed financial markets problems we haven't met, but through learning and reflection, a rainy day, reflect on lessons learned on what the new international rules, orders, standards and supervision. This prevent making the same mistakes in the future is good for us.

The current phase of financial reforms and development: liberalization, internationalization and diversification

The global financial crisis later, we follow the party's 18 and 18 two, three, four plenary session in the spirit, deepen reform and opening up, promote financial liberalization, internationalization and diversification.

Market-oriented

The 18 session of the party explicitly proposed to let the market plays a decisive role in the allocation of resources. Resources in economic terms refers to factors of production, including labor, capital, land, moreover, sometimes extended to energy products. In short, the so-called resource allocation is the allocation of factors of production. Obviously, foreign exchange funds, including funds how to configure, is to let the market plays a decisive role in the allocation of resources is a very important element, to achieve this goal, will realize the price of money the marketization of interest rates and exchange rates. These are two important elements of market reform.

On market-oriented interest rate. Implementation is a process of interest rate liberalization, have completed a number of steps before. 2004 began promoting the loan interest rate liberalization. Have a general idea of interest rate marketization, namely small after loans savings account, the first large, after foreign currency local currency. Later, along the way a number of reform, then met with the global financial crisis, financial work focused not on market-oriented reforms. After the financial crisis, we are beginning to speed up the reform of interest rate marketization. Through years of reform, lending rates have been completely liberalized, other interest rates on the financial markets, such as bonds, interest rates on borrowing and paper, previously have been completely liberalized, only the deposit interest rate floating ceiling 50% management. Many people believe that last step of the deposit interest rate is the interest rate marketization. In fact, this last step is divided into several small steps, over the past two years, the deposit interest rate floating ceiling increased from 10% to 20%, and then increased again to 30% and is now 50%, has four steps. I guess 50%, pace can increase, accelerating the market.

On the currency market. Our country has gone through a long phase of exchange market. As early as the end of 1993, we carried out two-track foreign exchange reforms in 1996, announced the current account convertibility, and began to gradually achieve convertibility under capital account, but conditions are not yet ripe, then met with the Asian financial crisis, reform of the exchange rate was slowing. The 16 session of the Party determines the overall objectives of the reform of the RMB exchange rate, namely the establishment of a sound based on market supply and demand, managed floating exchange rate regime, the Renminbi exchange rate remained basically stable at a reasonable and balanced level. In accordance with this request, and in 2005, promoting the reform of the exchange rate, introduced to market supply and demand basis, adjusted with reference to a basket of currencies, managed floating exchange rate regime. After 2007, 2012 and 2014, three adjustments, the Yuan-dollar trading price fluctuation range gradually expanded from 3 ‰ to 2% a day, while people's bank foreign exchange intervention to the exit to normal. New exchange-rate regime to let the Yuan's exchange rate more fully reflect economic fundamentals, an important element of which is to reflect the current-account balance, namely exchange rate mainly decided by the supply and demand of foreign exchange market. There were four current account items, including two large trade in goods and services, as well as investment income and transfers two small items.

Internationalization

After years of market-oriented reforms on the basis of financial reform and development can increase the pace of internationalization, previously did not have this condition. In recent years, the rapid internationalization. An important work was launched in Shanghai and Hong Kong in 2014, and realized the Shanghai Stock Exchange and Hong Kong Stock Exchange interconnection. International of another a important field is Yuan international momentum speed up, and Yuan capital project can exchange speed up advance, and Yuan away from bank market construction get strengthening and financial support enterprise "out of to" of pace speed up, including current has run of Silk Road Fund and is preparatory of Asia based facilities Investment Bank, also including is hot on the in the of Yuan can joined international currency Fund Organization of special drawing right (SDR), to became international main reserves currency one of, hot issues.

On the internationalization of RMB. It should be said, than people started the internationalization of RMB banking, financial management departments, including the foreign exchange Bureau envisaged earlier, welcomed by the international community against the Renminbi level is more than we had expected. Internationalisation is smoothly, mainly because of the global financial market was very weak in Western countries during the financial crisis, caused by financial crises and currency instability, lack of dollars on the market, and the lack of confidence in the dollar, European sovereign debt crisis, the euro larger oscillations, Japan economy is not so good, also affected the yen. In short, the global financial crisis had a negative impact on the major international currencies, the Yuan was welcomed. First is Korea needs for stability, the active request and currency swaps in China, then continue to swap more than more than 20 developing countries, even developed countries have joined in, beginning in 2014, respectively, China and the European Central Bank and the United Kingdom, and Switzerland and other countries Central Bank currency swap arrangements. So, it can be said that the outbreak of the global financial crisis, somewhat unexpectedly pushed the currency to the international community.

Our attitude towards internationalisation, first is the opportunity to adapt to market demand. Since the international community welcome the Renminbi, while China has become the world's second-largest economy, through internationalisation in the international market, achieving the optimal allocation of domestic and international resources, and of great benefit to China. Therefore, we should, according to its economic strength, response to real demand, promote internationalisation. Second, really wants to be a strong currency, and bring it in line with market expectations to that position, we're going to do your homework, continue to promote the economic and financial reforms, changing the rules and continue to take measures in order to meet the needs of internationalisation.

At present, associated with the internationalisation of work mainly includes the following items.

First, China and other countries signed an agreement on using local currencies in bilateral trade and investment. Such as China and Russia you can use economic and trade exchanges between RMB, you can also use the rouble.

Second, bilateral currency swaps between the Central Bank. If, for instance, Russia lacks the Yuan, or China's lack of ruble, the two central banks can swap the Center, Yuan went out.

Third, specifies the Renminbi clearing bank. Both use of the currency, foreign currency on the market sometimes more and sometimes less, more time should be allowed to return to the territory and can swap out less, as a mechanism for clearing house is required to complete. In theory, or in the clearing bank of China to set up the ruble, but more popular, so a lot of countries want to set up renminbi clearing bank. Meanwhile, not only neighbouring countries or developing countries, a significant change in recent years is from the United Kingdom started in some Western countries also called for the establishment of the Renminbi clearing bank.

Four is the initiative of those countries began to announce the Yuan as part of its foreign exchange reserves.

Five bilateral currency traded directly. Yuan first and Malaysia direct trading in the ringgit. Until then, trading between the renminbi and ringgit is through dollar cross, the renminbi into dollars, dollars for ringgit. This method is sometimes greatly influenced by unstable dollar and spreads, and higher costs. Through direct transactions with currencies of other countries, bilateral currency exchange rates can be formed without cross in other currencies and higher degree of convenience.

On capital account convertibility. Based on the smooth progress of financial reform in China, the Yuan can accelerate towards capital account convertibility. Back in 1996, announced the current account convertibility in China. In terms of capital, used to be foreign direct investment (FDI) can be exchanged, and many other items cannot be exchanged, such as stocks, bonds, and convertibility of fund investment levels are not high. Another feature is that prior approval number. In fact, large amounts of capital are not fully convertible, but requires proactive management and approval, majority of market players can make a detour. Now, a lot of proactive management of projects and gradually open up. But capital controls and gradually open up does not mean an absentee, also was to attend, especially several management should be strengthened, including money laundering, financing of terrorism and against excessive use of "tax havens", such as tax evasion. In addition, emerging and developing economies could also take some measures to prevent excessive speculative short-term capital. If it is a medium-and long-term investment, we are welcome, but for short-term speculation funds allows you to set a number of control measures at the international level. These basic work in promoting capital account convertibility, given to domestic companies in international finance "go" more support for overseas better development can play an important role in promoting.

About joining the special drawing right (SDR). In simple terms, a basket of the SDR is an international reserve currency, currently in the basket, including US dollars, Japanese yen, euro, British pound four international monetary. Considered every five years, the International Monetary Fund special drawing rights. 2015 is the review year, all want the Yuan to be able to join the currency basket. It has become a subject of concern to the international community. Internationalisation a good momentum in recent years, the International Monetary Fund, are seriously considering the matter.

Diversity

Early in the transition, because the basic organizational structure did not meet the requirements of the market economy, there is no effective macro-control framework, the financial system is unhealthy, there is no standardization, no experience and capabilities to deal with the crisis. Only health specialization, standardization and transformation, transition economies to achieve greater financial system market, international, also would have the guts and ability, energy diversification. Imagine when the financial system is unhealthy situations, is afraid of developing complex derivative products. Current financial development of the Internet is likely to do so. Internet development finance will inevitably pose some risk, if the financial system is not good, it is difficult to take these risks, but if you lay a good foundation, you can develop. Recently, from the State Council to study Central encourage and standardize the basic framework of the financial development of the Internet. And related issues that reflect the current diversity characteristics of China's financial reform and development stage.

The internal logic of financial reform and development in China

Through the above review is not difficult to see, financial reform and opening up, China has a strong logic: early in the transition, you need health, standardization and specialization and a series of penetrating and powerful adjustment, can we gradually towards a market-oriented, internationalization and diversification stage.

Reform of transition economies face similar difficulties The wind has changed drop fastest CEO Wei Cheng

We may wish to compare a number of emerging market countries, especially transition countries, that is, from the over centralized centrally planned system to a market economy country, whose basic characteristics are in the process of transition will have huge financial hole. First of all, after the beginning of transition, past errors caused by central planning focused allocation of resources must be shown, or financial performance has a huge debt burden, or a huge non-performing assets of the banking system. Then, early in the transition, due to inadequate laws and regulations and related systems, lack of regulatory experience, lack of supervision personnel and, therefore, must have a lot of loss, there must be policy-related finance and commercial finance inseparable, resulted in increased losses in the financial system. China in the early reform and no wages made by the enterprise, even the Chinese new year dumplings advance money to banks, make dumplings called loan. As you can imagine, dumplings eaten nothing left over, what to do? Therefore, the quality is very bad in the financial system.

When hole is big in China. At the outbreak of the 1997 Asian financial turmoil, China's banking system of bad assets rate estimate is at least 25%, is estimated to be 45%, specific value depends on accounting standards and loan classification standards. If 45%, banks ' bad assets are nearly half of GDP, a considerable part of which reflects the losses in the financial system. Not only is China, the former Soviet Union, Eastern Europe and some emerging market countries, has experienced serious financial difficulties, and some is reflected in the financial or reflected in the financial system. In 1998, Russia's large banks are basically very live, even the debt defaults, led to financial turmoil in Asia, at the end of August 1998, spread to Russia and Brazil, then caused the collapse of LTCM.

Will be found in international comparison, reform and development of financial systems in transition economies are bound to face several difficulties. Without strong measures, not resolve, not clean up the unhealthy financial problems, without introducing the rules of market economy, the banking system will be difficult to survive. As a result, most of the former Soviet Union, Eastern Europe, the Balkan country's banking system was not passed, or substantially all of the business to the West Bank. As you can see, many Eastern European countries ' share of foreign banks accounted for more than 90%. China accounted for about 2% in the total assets of foreign banks in the banking sector. Therefore, if China is not after a series of financial restructuring, promoting healthy, standardization marketing and probably national banking system does not hold water.

Financial reform and the development of timely remedial

Today we have the conditions to promote the reform of marketization and internationalization and diversification, but in the process, there are also individual content that requires remedial. Because some of the changes were going to do in the past, but due to the crisis, such as a variety of reasons, has been delayed.

A preliminary framework is the establishment of deposit insurance system.

On May 1, 2015, the deposit insurance regulations have been implemented. The deposit insurance system is an important element in the healthy development of the banking system under the conditions. Since we are allowing banks, now allows private capital and initiated the establishment of small and medium sized banks, improve the vulnerability of communities, rural financial services, requires the establishment of a deposit insurance system, according to the market principles of handling bank closure. In principle, the deposit insurance system should be established early, but for various reasons did not make up now.

Second, advance the reform of policy banks.

In 1993 the 14 session of the Party decided to set up three policy banks, to undertake policy business of the Bank, allowing the largest banks to be converted into commercial banks. But today, how should policy banks down to change it? In this regard, the International is also repeated. In the age of Reagan, Thatcher, advocated the privatization of public corporations in the world, there are a number of policy-oriented financial institution is performing poorly, resulting in a loss, 1998 Japan long-term credit bank failures, caused great controversy, so generally advise getting rid of bodies. Later, in 2008, when the global financial crisis, the international community found, many commercial financial institutions really do or do not want to do, need for policy-oriented financial institutions add. Meanwhile, policy arm of a big change in business model, not necessarily a loss, to State subsidies. Some policy-oriented financial institutions in the national strategy for service-oriented at the same time, achieve financial sustainability, but also focus on enhancing efficiency. In addition, many public infrastructure and utilities around the world, through reform can charge items, such as roads, can be made of the policy Bank development finance. This, of course, to do a lot of exploration and summary, assessments in a timely manner.

In short, at the current stage, we needed to do some work. Meanwhile, according to the 18 session of the party's strategic plan, with the "Twelve-Five" plan ending year of working arrangements and meet the 13th five-year plan, continue to marketization and internationalization, financial reform characterized by diversified development of their work.

(This article May 27, 2015, Zhou xiaochuan, lecture-cum-cadres of the people's political consultative conference CPPCC in Beijing learning lecture series learning the speech published in 2015 the China financial the 19th, originally titled Zhou xiaochuan: financial reform and development and its internal logic)

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