Strengthen financial supervision, strengthen risk prevention, and consolidate financial risk handling responsibilities

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China Research Network

The second draft of the draft has made important revisions and supplements in improving the relevant provisions on financial risk prevention and disposal, which aim to strengthen financial supervision, strengthen risk prevention, and consolidate risk disposal responsibilities to maintain the stability and healthy development of the financial market.

Specifically, the improvements in the second review draft are mainly reflected in the following aspects:

Strengthening Financial Supervision: The Draft proposes to bring all financial activities under supervision and management, and adopts a variety of regulatory methods, such as institutional supervision, behavioral supervision, functional supervision, penetrating supervision, continuous supervision and regulatory accountability, with the aim of improving regulatory capacity and regulatory coordination. At the same time, the establishment of financial institutions and the conduct of financial business activities must be approved by the financial management department of the State Council in accordance with the law, and this provision ensures the legality and standardization of financial activities.

Strengthening Financial Risk Prevention: The draft increases the responsibilities of the relevant departments of the State Council and provincial-level people's governments in preventing and investigating illegal financial activities in accordance with the law, so as to form a multi-level and all-round financial risk prevention system. At the same time, the financial risk prevention system has been improved, and the monitoring, identification, early warning and early correction of financial risks have been strengthened, with the aim of discovering and dealing with potential risks in a timely manner and preventing the spread and escalation of risks.

Consolidating responsibilities for handling financial risks: The draft further clarifies the division of responsibilities between the financial management department of the State Council, provincial-level people's governments, and other relevant departments of the State Council in handling financial risks, so as to ensure that risk events can be dealt with quickly and effectively. This division of responsibilities helps to form synergies and improve the efficiency and effectiveness of risk management.

In addition, the second draft of the draft has also made some technical revisions and improvements, so that it is in line with the provisions on risk prevention, resolution and disposal in relevant fields in financial laws such as the People's Bank of China Law, the Commercial Bank Law, the Banking Supervision and Administration Law, the Securities Law, and the Insurance Law. This convergence will help form a unified financial regulatory system, avoid regulatory gaps and overlaps, and improve the overall efficiency of financial supervision.

These improvements and additions in the second draft will help strengthen financial supervision, strengthen risk prevention, and consolidate the responsibility for risk disposal, so as to provide a strong institutional guarantee for the stable and healthy development of the financial market.

According to the display released by the China Research Institute of Puhua Industry Research Institute:

With the increasing severity of global climate change and environmental problems, green environmental protection has become a global consensus. As an important force to promote the development of environmental protection, the market trend of the sustainable finance industry will pay more and more attention to green environmental protection and low-carbon development.

Governments around the world have introduced policies to encourage and support the development of sustainable finance. For example, the Chinese government has proposed a "30/60" dual carbon target, which provides strong policy support for the development of sustainable finance. These policies will promote the rapid development of the sustainable finance industry.

As investors' focus on environmental protection and sustainability continues to grow, more and more investors are incorporating sustainable investing into their investment strategies. This will drive innovation and diversification of sustainable financial products.

The sustainable finance industry faces some challenges, such as low market awareness, insufficient innovation of green financial products, and difficulty in environmental risk assessment. These challenges require sustainable financial institutions to strengthen their market promotion, product innovation capabilities and risk management capabilities.

With the increasing global emphasis on environmental protection and sustainable development, the sustainable finance industry will usher in more development opportunities. At the same time, with the continuous advancement of technology and policy support, the sustainable finance industry will achieve more rapid development.

The current market development status of the sustainable finance industry can be summarized from the following aspects:

Market Growth & Size:

In recent years, with the increasing global emphasis on sustainable development and environmental protection, the sustainable finance industry has developed rapidly. According to reports, the global carbon allowance trading market has reached hundreds of billions of US dollars, and the annual issuance of sustainable financing is also showing a rapid growth trend.

In China, the balance of green loans continued to grow, reaching RMB15.9 trillion in 2021, up 33% year-on-year, ranking first among all types of loans. In addition, pan-ESG mutual funds also achieved rapid growth, with assets under management reaching more than RMB540 billion, more than three times more than in 2020.

Product Types and Investment Hotspots:

The sustainable finance industry covers a variety of financial products and services, such as green bonds, green funds, ESG investments, etc. These products and services are designed to promote environmental protection, climate change response, and socially responsible investment through financial means.

At present, there is an increasing demand for sustainable investment from investors, and more and more institutions are beginning to incorporate sustainability factors into their investment decision-making process.

Policy Promotion:

Governments around the world have introduced policies to encourage and guide financial institutions to carry out sustainable finance business. For example, the European Union has launched the Sustainable Finance Action Plan, which clarifies the framework and goals for the development of sustainable finance. In China, the government has also proposed a series of policies and targets, such as the "30/60" dual carbon target, to promote the development of sustainable finance.

Financial Institutions Involved:

More and more financial institutions, including banks, insurance companies, securities companies, etc., are actively participating in the sustainable finance market. These institutions not only provide sustainable financial products and services, but also actively promote sustainable financial concepts and practices.

Some leading financial institutions have embraced sustainability as an important corporate strategy and accelerated ESG transformation to adapt to market changes and meet investor needs.

Market Opportunities and Challenges:

The sustainable finance market provides financial institutions with vast market opportunities, but also faces some challenges, such as regulatory requirements, information disclosure, risk assessment, etc. Financial institutions need to continuously improve their capabilities to better grasp market opportunities and meet challenges.

Future Trends:

With the increasing global emphasis on sustainable development and environmental protection, the sustainable finance industry will continue to maintain a rapid growth trend. In the future, sustainable finance will become an important part of the financial industry and promote the sustainable development of the global economy.

At the same time, with the advancement and innovation of technology, new products and services will continue to emerge in the sustainable finance industry to meet the changing needs of the market.

With the increasing severity of global climate change and environmental problems, green environmental protection has become a global consensus. As an important force to promote the development of environmental protection, the future development trend of the sustainable finance industry will pay more attention to green environmental protection and low-carbon development. More financial institutions will actively participate in the sustainable finance business and promote the innovation of green financial products to meet the market demand for environmental protection, low-carbon and other investment projects.

The development of new technologies such as artificial intelligence, big data, and blockchain will bring revolutionary changes to the sustainable finance industry. These technologies will improve the innovation capability and risk management level of green financial products, and promote the digital transformation and intelligent upgrading of the sustainable finance industry.

As investors' focus on environmental protection and sustainability continues to grow, more and more investors are incorporating sustainable investing into their investment strategies. This will promote the continuous expansion of the sustainable financial market and drive the innovation and development of financial products such as green bonds and green funds.

With the increasing global emphasis on environmental protection and sustainable development, the scale of the sustainable finance market will continue to expand. The sustainable finance industry is expected to maintain rapid growth in the next few years, providing more opportunities and challenges for financial institutions.

With the continuous advancement of technology and the continuous maturity of the market, green financial products will become more diversified. In addition to traditional financial products such as green bonds and green funds, more innovative green financial products, such as green insurance, green leasing, etc., will emerge to meet the needs of different investors.

With the continuous expansion of the sustainable finance market and the diversification of products, risk management will become an important task for the sustainable finance industry. Financial institutions need to strengthen their environmental risk assessment and monitoring capabilities to ensure that green investment projects are risk-controllable and sustainable.

The market size of the sustainable finance industry will continue to expand, green financial products will be more diversified, international cooperation will be closer, and risk management will be more important. Financial institutions need to actively seize market opportunities, strengthen technological innovation and risk management capabilities, and promote the healthy development of the sustainable finance industry.

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