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Identify Chinese Systemically Important Banks to Strengthen Supervision and Prevent Risks —— The heads of the relevant departments of the People’s Bank of China and the China Banking and Insurance Regulatory Commission answered reporters’ questions on “Measures for assessing relevant banks. systemic “
Xinhua News Agency, Beijing, December 3 Question: Identify Chinese Systemically Important Banks to Strengthen Supervision and Risk Prevention: The People’s Bank of China, China Banking Regulatory Commission and relevant department heads answer reporters’ questions on “Measures for assessing systemically important banks”
Wu Yu, Xinhua News Agency reporter
In order to improve the regulatory framework for systemically important financial institutions in China, the People’s Bank of China and the China Banking and Insurance Regulatory Commission jointly issued the 3 3 “Measures for the assessment of systemically important banks”. Why evaluate Chinese systemically important banks? How to evaluate? How to supervise in the future? The heads of the relevant departments of the People’s Bank of China and the China Banking and Insurance Regulatory Commission answered reporters’ questions on related issues.
Since the 2008 international financial crisis, strengthening oversight of systemically important financial institutions and preventing big-to-fail problems have become important contents of financial regulation reforms on a global scale.
The reporter learned that since 2011 the Financial Stability Board has published a list of global systemically important banks annually and has formed a relatively clear regulatory framework. Four banks, including the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and Construction Bank were all selected from the list of global systemically important banks.
Why evaluate Chinese systemically important banks? The heads of the relevant departments of the People’s Bank of China and the China Banking and Insurance Regulatory Commission stated that systemically important financial institutions are large, highly complex and highly correlated with other financial institutions. Once problems occur, they can be highly contagious to the financial system and affect macroeconomic operations. It can even have a greater impact.
Therefore, according to the framework guidelines issued by the Basel Committee on Banking Supervision, countries have also established a national systemically important banking supervisory policy framework based on their actual conditions. In November 2018, the People’s Bank of China, the China Banking Regulatory Commission and the China Securities Regulatory Commission jointly issued “Guiding Opinions on Improving the Supervision of Systemically Important Financial Institutions”, which clarified the general institutional framework for assessing and the identification, additional supervision and restoration of systemically important financial institutions.
The heads of the relevant departments of the People’s Bank of China and the China Banking and Insurance Regulatory Commission stated that the People’s Bank of China, in cooperation with the China Banking and Insurance Regulatory Commission, has formulated assessment methods to lay the groundwork for subsequent release. the list of systemically important banks and the implementation of additional regulatory requirements. The “Measures for the assessment of systemically important banks” went into effect on January 1, 2021, identifying Chinese systemically important banks and publishing a list each year.
So how do you evaluate Chinese systemically important banks?
The valuation method clarifies the valuation method, valuation scope, valuation process and division of labor of Chinese systemically important banks and establishes the system of systemic Chinese banks valuation ratios of four scale dimensions , correlation, substitutability and complexity. In the specific assessment, the data submission template and instructions for filling the data will be sent to the participating banks and the participating banks will be collected and evaluated.
According to the assessment process, quantitative assessment indicators are first used to calculate the systemic importance score of the participating banks, and banks with a score of 100 are included in the initial list of systemically important banks. Then combine other quantitative and qualitative information to make supervisory judgments and comprehensively assess the systemic importance of participating banks. After the final list of systemically important banks is determined by the State Council’s Financial Stability and Development Committee, it will be jointly published by the People’s Bank of China and the China Banking Regulatory Commission.
When it comes to follow-up supervisory measures, the heads of the relevant departments of the People’s Bank of China and the China Banking and Insurance Regulatory Commission said that the People’s Bank of China will work with the China Banking and Insurance Regulatory Commission to formulate additional requirements regulations for systemically important banks after the valuation measures have been released. It is proposed to propose regulatory requirements for systemically important banks in terms of additional capital, leverage ratio, broad risk exposure, corporate governance, recovery plan, information disclosure and data transmission. An early correction mechanism will also be established to promote the reduction of systemically important banks. Complexity and systemic risks, establish and improve the internal capital containment mechanism, strengthen the ability of banks to resist risks and absorb losses, improve their self-rescue capacity and prevent “big to fail” risks.
The reporter learned that when formulating and implementing additional regulatory requirements, the People’s Bank of China and the China Banking and Insurance Regulatory Commission will fully consider factors such as the macroeconomic situation, bank capital replenishment needs and serve the real economy and will reasonably organize the timing of the introduction.
The heads of the relevant departments of the People’s Bank of China and the China Banking and Insurance Regulatory Commission have stated that for different groups and types of systemically important banks, they will implement policies classified according to their operational characteristics and systemic risk performance, will combine differentiated additional legislation implementation and will establish reasonable transitional provisions. , To ensure that the policy has a neutral impact and implemented in a stable and orderly manner.
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