National People's Congress Deputy and former President of the People's Bank of China Liaoning Branch, Fu Xiguo: Accelerate the revision of the People's Bank of China Law and improve the legal regulation of digital RMB

Source: Securities Times Network Author: Securities Times Two Sessions Reporting Team

During the 2026 National Two Sessions, NPC Deputy and former Head of the People’s Bank of Liaoning Province, Fu Xiguo, introduced three suggestions he submitted this year, covering legislation on the Financial Stability Law, amendments to the People’s Bank Law, and optimization of the pension industry system.

Core Concepts and Responsibilities in the Financial Stability Law Need Further Clarification

In recent years, China’s financial legislation has steadily advanced, gradually forming a multi-layered legal system. From June to July 2024, the draft of the People’s Republic of China Financial Stability Law (Second Review Draft) was publicly solicited for opinions.

Fu Xiguo believes that the systemic, complex, and spillover characteristics of financial risks make it difficult for industry legislation to achieve full coverage of risk monitoring and disposal. The proposed Financial Stability Law, as a specialized law to maintain financial stability, should complement the functions, procedures, and rules of the ongoing revisions to the People’s Bank Law, Banking Supervision Law, Enterprise Bankruptcy Law, and the proposed revision of the Commercial Bank Law. However, current legislative practices still face issues such as inconsistent concept definitions and disjointed legal provisions.

Regarding specific bottlenecks in current legislation, Fu Xiguo identified four main areas. First, there is controversy over the understanding of the concept of “systemic financial risk,” which requires further clarification of its definition and criteria.

Second, responsibilities for preventing and resolving financial risks need to be more clearly defined. While the second draft establishes the Central Financial Work Commission’s coordinating role, further improvements are needed to better align with the post-reform financial management system.

Third, the linkage between administrative and judicial procedures in risk disposal needs strengthening, and coordination with related laws should be improved. The draft proposes “trustee” as a disposal measure, but the current revisions of the Commercial Bank Law and Banking Supervision Law do not clarify the legal status of “trustee.” It is recommended to revise these laws in conjunction.

Fourth, the sharing of losses and the order of fund use require further clarification. The “Financial Stability Guarantee Fund” proposed in the draft law and the industry guarantee fund in the current Commercial Bank Law need clearer boundaries and priorities. The bankruptcy law draft does not reflect the special nature of financial institutions, which may lead to excessive public fund losses.

Based on these issues, Fu Xiguo recommends: first, establishing a comprehensive system for risk prevention, resolution, and disposal, emphasizing systemic risk control; second, clarifying responsibilities based on the principles of accountability and incentives, with the Central Financial Work Commission as the decision-making body, the Financial Regulatory Administration responsible for individual bank risk disposal, and local governments responsible for territorial risks, while the People’s Bank monitors systemic risks and acts as the last lender to close the responsibility loop; third, avoiding conflicts with laws like the Enterprise Bankruptcy Law, such as adding “risk disposal loss sharing” clauses in the Commercial Bank Law and prioritizing the Financial Stability Guarantee Fund’s aid payments in bankruptcy proceedings.

Amendments to the People’s Bank Law to Improve Digital Renminbi Legal Regulation

The current People’s Bank Law of the People’s Republic of China was revised and implemented in 2003, over twenty-two years ago. During this period, China’s financial sector has undergone reforms in regulatory systems, digital transformation, and upgrades driven by real economic needs. The existing law increasingly lags in defining statutory responsibilities, regulating emerging business forms, and authorizing regulatory tools.

Considering the latest developments, Fu Xiguo suggests accelerating the revision of the People’s Bank Law, proposing five key amendments. First, add a clause emphasizing the centralized and unified leadership of the Party Central Committee over financial work, clarifying the political basis of financial regulation. A new article in the general provisions should state: “Adhere to the centralized and unified leadership of the Party Central Committee over financial work,” establishing this as a fundamental principle for the central bank’s duties.

Second, embed the “dual-pillar” macro-control framework of “monetary policy + macroprudential policy” into the core legal provisions, clarifying its legal status and objectives. Detail the application rules for macroprudential tools such as countercyclical capital buffers, risk reserves, and additional supervision of systemically important financial institutions, including trigger conditions, adjustment procedures, and standards, granting the central bank necessary discretion. Establish mechanisms for coordination between macroprudential regulation and monetary policy to enhance the systemic effectiveness of macro-financial regulation.

Third, clarify the responsibilities for macro-credit management, including fund statistics, monitoring, and guidance. Empower the central bank to monitor fund flows in key areas, establish cross-departmental information sharing, and require financial institutions to regularly report credit data in key sectors to support macro-control. Add provisions supporting new productive forces, allowing the central bank to use differentiated interest rates and special credit quotas to guide financial support for technological innovation and industrial upgrading.

Fourth, improve the financial infrastructure regulation system, defining access, operation, and risk disposal rules. Clarify the scope of core financial infrastructure, achieve comprehensive regulation, and establish operational supervision and risk management mechanisms. Require infrastructure operators to implement routine risk management and emergency plans to ensure market safety.

Fifth, strengthen legal regulation of digital renminbi, clarifying issuance management and risk prevention. Confirm the legal status of digital renminbi as legal currency, with equal legal effect as physical currency. Standardize issuance procedures, specify the core responsibilities of the People’s Bank as issuer, criminalize counterfeiting and tampering, and establish legal responsibilities and penalties to ensure the security of digital currency circulation.

(Edited by: Wen Jing)