National People's Congress Deputy and former head 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

During the 2026 National People’s Congress and Chinese People’s Political Consultative Conference, Fu Xiguo, a deputy to the National People’s Congress and former head of the People’s Bank of Liaoning Province, introduced three suggestions he submitted this year. These cover legislation on financial stability, 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 “Financial Stability Law of the People’s Republic of China (Second Review Draft)” (hereinafter referred to as the “Second 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 resolution. The proposed Financial Stability Law, as a specialized law to maintain financial stability, should complement and coordinate with the ongoing revisions of the People’s Bank Law, the Banking Supervision and Administration Law, the Enterprise Bankruptcy Law, and the Commercial Bank Law. However, current legislative practices still face issues such as inconsistent concept definitions and disjointed legal provisions.

Regarding specific obstacles in current legislation, Fu Xiguo highlights four main points. First, there is controversy over the understanding of the concept of “systemic financial risk,” which requires clearer definitions and criteria.

Second, responsibilities for preventing and resolving financial risks need further clarification. The Second Draft establishes the Central Financial Work Commission’s coordinating role but still needs improvement 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 “trusteeship” as a disposal measure, but the current revisions of the Commercial Bank Law and the Banking Supervision Law do not specify its legal status. It is recommended to revise these laws jointly.

Fourth, the sharing of losses and the order of fund usage require further clarification. The “Financial Stability Guarantee Fund” in the proposed 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 in its repayment order, which could lead to excessive public fund losses.

Based on these issues, Fu Xiguo suggests: first, establishing a comprehensive system for risk prevention, mitigation, and resolution, emphasizing systemic financial 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 management, and local governments responsible for territorial risks, while the People’s Bank monitors systemic risks and acts as the last lender, forming a responsibility loop; third, avoiding conflicts with laws like the Enterprise Bankruptcy Law, such as adding a “risk disposal loss sharing” clause in the Commercial Bank Law and granting the Financial Stability Guarantee Fund priority in claims.

Amendments to the People’s Bank Law to improve digital renminbi regulation

The current “People’s Bank of China Law” 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, regulatory tools, and regulation of emerging business models.

In light of the latest developments, Fu Xiguo recommends accelerating the revision of the People’s Bank Law, with five key suggestions: 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. The general provisions should include “upholding the centralized and unified leadership of the Party Central Committee over financial work” as a fundamental principle.

Second, embed the “dual-pillar” framework of monetary policy and macroprudential policy into the core legal provisions, clarifying their legal status and objectives. Detail the application rules for macroprudential tools such as countercyclical capital buffers, risk reserves, and additional regulations for systemically important financial institutions, including their triggers, 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 data collection and guidance. Empower the central bank to monitor funds in key sectors, establish inter-agency information sharing, and require financial institutions to regularly report credit data in key areas to support macro-control. Add provisions supporting new productive forces, allowing the central bank to use differentiated interest rates and special credit quotas to promote technological innovation and industrial upgrading.

Fourth, improve the regulation of financial infrastructure, defining access, operation, and risk management rules. Cover core financial infrastructure comprehensively, establish operational supervision and risk disposal mechanisms, requiring operators to implement routine risk management and contingency 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 tender, with the same legal effect as physical currency. Standardize issuance procedures, specify the core responsibilities of the central bank as issuer, criminalize counterfeiting and tampering, and define legal liabilities and penalties to ensure the security of digital currency circulation.