Research on Cooperation Mechanism of China's Financial Regulation and Supervision System

Financial regulation and supervision is an important subject in finance research. After the U. S. subprime mortgage crisis,the weakness in this field becomes the research focus. Every country attaches importance to strengthen the financial supervision and management. But the financial regulatory system is a large system,and the process of model building and index selection is very complicated. A model for China's financial regulation and supervision system was proposed and a system evaluation method was improved. A more exact result was drawn by choosing 2003- 2009 index data.

RegTech:Theory and Practice in Technology-Driven Financial Regulation

As a disruptive innovation,FinTech has posed risks in the financial industry that are more unidentifiable,sweeping,disruptive and influential.Given these new developments,deeper regulatory reform has become necessary to safeguard national financial security,and prevent and dissolve financial risks.On March 11,2021,the 14th Five-Year Plan'endorsed by the Fourth Session of the 13th National People's Congress stressed that China will improve the modern financial regulatory system and shore up our weaknesses in the regulatory system,and boost the application of regulatory technology and financial innovation risk assessment.This marks that the establishment of a technology-driven financial regulatory framework has been put on the agenda.Based on an analysis of the essential implications and drivers of RegTech innovation,this paper discusses the theoretical logic of RegTech innovation.Technology enables intelligent regulatory processes,efficient information processing and robust risk control.The restructuring of the regulatory system has revealed shifts in regulatory paradigms.These include a shift from passive response to proactive change,a shift toward positive interactions between regulators and industry players,as well as more close coordination among regulators.These changes have resulted in more adaptable and efficient regulation.After summarizing foreign experience and Chinese practice,this paper presents optimal pathways for RegTech innovation in China in the following aspects:consolidating the rule-of-law foundation for RegTech innovation,speeding up institutional reforms,improving policy services,strengthening infrastructure development,and building multiparty cooperation mechanisms.This study serves as a reference for building a technology-centric modern financial regulatory system and a sound environment forFinTechdevelopment.

State Council Issued the “Regulations on the Control of Foreign Funded Financial Institutions”

The Xinhua News Agency has released the full text of the No.340 order of the State Council signed by Premier Zhu Rongji, on the publication of the Regulations of the People’s Republic of China on the Control of Foreign Funded Financial Institutions, which will take effect on the date of February 1 in 2002.

Distributed ledger technology for securities clearing and settlement: benefits, risks, and regulatory implications

This article outlines the benefits and risks of the distributed ledger technology(DLT)for the clearing and settlement of exchange-traded and OTC securities,followed by a description of the technology’s potential role for central counterparties and central securities depositories.Although the industry and scholars are attempting to solve the technological and operational issues that DLT systems still face,outstanding legal risks are such that the financial industry is asking for more regulatory guidance and intervention.This article wants to contribute to the public policy debate by presenting potential regulatory barriers that may have to be removed for DLT to be fully adopted.In addition,it identifies areas requiring an update of the legal framework in order to address certain prudential and conduct risks that this technology could introduce.

Are suspicious activity reporting requirements for cryptocurrency exchanges effective?

This study analyzes the impact of a newly emerging type of anti-money laundering regulation that obligates cryptocurrency exchanges to report suspicious transactions to financial authorities.We build a theoretical model for the reporting decision structure of a private bank or cryptocurrency exchange and show that an inferior ability to detect money laundering(ML)increases the ratio of reported transactions to unreported transactions.If a representative money launderer makes an optimal portfolio choice,then this ratio increases further.Our findings suggest that cryptocurrency exchanges will exhibit more excessive reporting behavior under this regulation than private banks.We attribute this result to cryptocurrency exchanges’inferior ML detection abilities and their proximity to the underground economy.

全球金融科技监管及改革趋势

Propelled by a combination of policy enablers,increasing investments,and the COVID-19 pandemic,the global financial technology(fintech) industry has entered a period of rapid growth in recent years.Yet it is important to note that poor regulation and weak supervision might produce risks and shocks to financial stability,business competition,social equity,and environmental resources.The encouraging approach toward fintech development adopted by major global economies over the past decade has ignored regulation to varying degrees,resulting in unbalanced and inadequate supervision,which has been falling short of meeting public concerns effectively.Since 2019,international discussions on how to regulate fintech have become more and more heated.It has been widely agreed that,to regulate fintech effectively,three pillars must be established—data,competition,and financial regulatory rules.Given the increasing challenges posed by large technology firms (big techs)to financial regulation,this paper proposes to prioritize entity-based regulation,with a focus on reforming the rules concerning operational resilience and competition.China should keep a close eye on international trends and learn to devise appropriate rules for entity-based regulation,which will prove necessary to guide the steady,sound,and sustainable development of its fintech industry.

Bitcoin Price Manipulation Regulation from a Game Perspective

Frequent price manipulation in the Bitcoin market will lead to market risk and seriously disrupt the financial order,but there is less research on its regulation.We address the Bitcoin price manipulation problem by building a regulatory game model.First,we study the price manipulation mechanism of the Bitcoin market based on behavioral finance and clarify the boundary conditions.Second,we introduce regulator constraints and establish a game model between the manipulator and the regulator.Further,through variable deconstruction,parameter verification,and simulation analysis,we explore how to achieve effective regulation of Bitcoin price manipulation.We find that the effective regulation of Bitcoin price manipulation can be achieved in three ways:(1)Adjust the penalty coefficient with a certain lower threshold so that the manipulator’s expected return is negative;(2)Set the lowest possible price fluctuation standard while ensuring that it does not interfere with market-based transactions;(3)The simulation of price manipulation regulation is optimized and most efficiently controlled when the probability of investigation is dynamically adjusted by a concave function on the price fluctuation standard.

eterminants of financial-risk preparedness for climate change:Case of Fiji

There is a growing concern among central bankers that climate change poses not only serious environmental problems but also a potentialeconomic and financial crisis.This study first confirms a hypothesized theoretical framework with different dimensions of the overall pre-paredness for climate related financial risk in the Fijian context,and then utilizes this framework to assess the present risk preparedness in Fiji.We tested two Confirmatory Factor Analysis(CFA)models in Structural Equation Modeling(SEM)Framework to analyse the survey data.Weevaluated these models using several fit indices.The first CFA model included four correlated latent factors defined by multiple indicators(items)reflecting four hypothesized dimensions.The four latent factors were correlated significantly.The second CFA model included a second-order multi-level constructs reflecting overall preparedness along with four constituent dimensions.The four dimensional factors showed sig-nificant and substantial loadings towards overall risk preparedness suggesting that there also exists an overall higher order construct.The modelfit indices showed that this second-order CFA model has an acceptable model fit.These results confirm that the four hypothesised dimensionsepolitical leadership(Political),administrative direction(Administration),international standards(Standards)and supervisory mechanisms(Supervision)eare identifiable and distinct aspects.In addition to the four dimensions,the results suggest that overall preparedness should alsobe tackled in a multi-level integrated manner.The results also reveal that political initiatives would be futile without proper administrativedirection and strong supervisory mechanisms.This theoretical framework can also be used to assess financial systems in other developingcountries with similar socioeconomic contexts.

On the Legal Attributes of Digital Currency

Digital currency has been widely used ever since the concept of Bitcoin was formulated.It uses blockchains as its underlying technical support and is characterized by decentralization,programmability,and security verification based on the principles of cryptology.Generally speaking,theories on the legal attributes of digital currency regard it either as nonmonetary property or as currency.The former theory can be subdivided into theories on digital currency as commodity,as securities or as data.All of these subdivisions present insurmountable theoretical difficulties and practical obstacles.If we return to the substantive nature of currency as a generally accepted accounting symbol,it can be seen that currency issuance by the state or a private bank is simply a means of building currency credit rather than a necessary condition.Unlike traditional currency,digital currency relies on blockchain technology to complete the construction of decentralized currency credit.This has resulted in a new theory of currency based on the theory of digital currency.On the one hand,it offers a jurisprudential foundation for the construction of the quasi-currency attributes of digital currency;on the other,it provides a theoretical basis for the gradual improvement of digital currency legislation.We can first determine the legal attributes of digital currency as a quasi-currency and then confirm its legal position when the time is ripe.We need to confirm the legal status of digital currency as a quasi-currency through legislation,and use this as a logical starting point for the construction of a series of legal systems for digital currency as a quasi-currency.Digital currency can easily be used as a tool for crime or for evading financial controls;therefore,we need to determine a regulatory body and formulate regulatory rules.

Reform and evolution of finance in China:evidence from China’s reform and opening-up in the past 40 years

Over the past 40 years since the launch of reform and openingup,China’s finance has undergone substantial and fundamental changes in terms of size,structure and pattern as well as function,competitiveness,and international influence.Therefore,an accurate and comprehensive understanding of the current situation of China’s finance and its history in the last four decades is a prerequisite for deepening the reform and opening-up of finance and a foundation for establishing a modern financial system in China.This paper reviews the historical evolution of China’s finance over the past 40 years,focussing on the volume and market share of different types of financial assets,financing tools and mechanisms,patterns in and functions of finance,the risk structure in the financial system,financial opening,and the financial regulation model.It further proposes that in the future,China should establish a modern financial system characterised by‘large-economy finance’.