| On October 1,2016,RMB was officially included in the IMF’s special drawing rights(SDR)basket.As one of the five Basket Currencies,its weight in the currency basket is second only to the US dollar and the Euro,becoming the first developing country currency to be included since the establishment of SDR.At the same time,it also declared that in order to meet the "free use" requirement of SDR currency,the internationalization of RMB will be irreversible in the future.Referring to the internationalization road of US Dollar and Japanese Yen,with the continuous expansion of overseas RMB accumulation scale,overseas offshore financial markets will have a certain impact on China’s domestic monetary policy.In order to manage domestic currency nearby and fully participate in the international financial business with domestic currency as the pricing currency in the continuous financial market opening process,the United States and Japan have successively established Offshore financial market including domestic currency which operates in an internal and external isolation manner.At present,Hongkong,London and Singapore have formed huge offshore RMB financial markets.If taken the United States and Japan as the benchmark,the establishment of RMB offshore financial markets in China will become an important step in the RMB internationalization strategy.Based on the failure lessons of the offshore financial markets of Japan,Thailand and Malaysia during the Asian financial crisis in 1997 and even further contagion of financial risks,it is necessary to lay out the financial supervision system in a forward-looking way for China to establish an RMB offshore financial market in the future.This paper analyzes and tracks China’s current financial legislation reform under the comprehensive opening-up with reference to the regulatory system of the U.S.and Japan’s offshore financial market.Based on the premise of ensuring national financial security,this paper aims to put forward the regulatory system of RMB offshore financial market.This paper consists of three parts: preface,main body and conclusion and the main body is organized as follows:The first chapter is the theoretical overview of international offshore financial regulation.This chapter briefly introduces the evolution,development process,development mode and market structure of the international offshore financial market;explains the evolution law of the offshore financial market from the perspective of economic theory;and defines the concept and particularity of the supervision of the offshore financial market from the perspective of legal theory.The international offshore financial market includes four types: internal and external mixed type,internal and external separation type,internal and external penetration type and tax haven type.The internal and external separation type market promoted by the government bears special mission,namely the country where the offshore market is located supervises the local currency circulating nearby in its own territory and improves the international banking competitiveness of domestic financial institutions.The interpretation of the evolution law of offshore financial market by various economic theories reveals that the internal and external separated offshore financial market has the characteristics of specific deregulation and specific supervision strengthening,and the direction of strengthening supervision requires the isolation of offshore funds and onshore funds.Legal theory can provide a clear regulatory framework for the supervision of offshore financial market: referring to the general regulatory dimension of financial market supervision,the supervision of offshore financial market should include the supervision of offshore financial business,the supervision of offshore financial institutions and the supervision of offshore capital flow.From the perspective of law,the supervision of offshore financial market faces two particularities: the diversification of supervision and the complexity of money circulation supervision.In the internal and external separated offshore financial market,the country where the market is located is not only the host country but also the issuing country of offshore trading currency,and based on these two identities,the regulatory power is expanded to the greatest extent.The second chapter is the evaluation and analysis of the development of China’s pilot offshore financial business,and puts forward the overall idea of the future supervision of RMB offshore financial market.This chapter reviews the current pilot offshore banking business in China,evaluates the development of the pilot business,and defines the overall orientation,regulatory principles and regulatory objectives of establishing RMB offshore financial market in China.At the same time,it is clear that the financial business of the offshore financial market is offshore banking business.Therefore,the regulatory effectiveness and risk of the pilot offshore banking in China will become the starting point of the future regulatory system of RMB offshore financial market.At present,China’s pilot offshore banking regulatory legislation seriously lags behind,the situation of non-compliance with the law has generally become an important reason for China’s offshore banking development experience ups and downs,risk concentration exposure.In the future,RMB offshore financial market needs to further include RMB as offshore trading currency on the basis of the current pilot,further access to foreign financial institutions,and further promote the opening of capital account,which will lead to more complex financial risks.The overall orientation of RMB offshore financial market makes clear the basic nature of RMB offshore financial market,and further clarifies the research object of this paper.Regulatory principles put forward constraints on the specific regulatory rules in the following chapters,which need to comply with the principles of competition,risk prevention and control,service for RMB internationalization and international cooperation.The regulatory objectives make it clear that the primary task of the supervision of the RMB offshore financial market is to prevent the risk of the offshore financial market.The third chapter discusses the offshore financial business supervision of RMB offshore financial market.This chapter further divides the supervision of offshore financial business into access supervision,transaction supervision,account supervision and return investment supervision.This chapter analyzes the regulatory rules of financial business in domestic and foreign separated offshore financial markets such as IBFs in the United States,JOM in Japan and ACU in Singapore,and analyzes the regulatory motivation behind the regulatory rules.The regulatory rules of offshore financial business reflect the particularity of offshore financial business,so it is the core regulatory content of offshore financial market.In the internal and external separated offshore financial market,the most important regulatory requirement of offshore financial business is to ensure that offshore funds and onshore funds are isolated from each other.Around this regulatory demand,the regulatory rules of various countries tend to be generally consistent,which is reflected in the restrictions on the types of access agencies,transaction types,transaction currencies,secondary market transactions,and the separation of funds between onshore and offshore accounts.In general,all countries make fine-tuning according to their specific national conditions.The pilot offshore banking business in China is similar to IBFs in the United States and JOM in Japan in terms of transaction types,capital isolation between onshore and offshore accounts,while lacks trading partner and secondary market trading restriction rules.In addition,the biggest differences between China and other domestic and foreign separated offshore financial markets are that foreign financial institutions are excluded from the market and RMB is not included in offshore trading currency,which will not exist in RMB offshore financial market.The fourth chapter discusses the supervision of offshore institutions in RMB offshore financial market.This chapter further divides the supervision content of offshore institutions into specific obligations,consolidated supervision and national treatment of offshore institutions.Offshore institutions are also offshore financial institutions.In order to ensure the isolation of offshore funds and onshore funds,it is necessary for the regulatory authorities to impose the obligation of offshore business information submission and examination of offshore funds isolation from onshore funds.It is in line with the international practice of offshore financial market to admit foreign branch banks to access RMB offshore financial market.As the host country,China needs to maximize the support from the home country consolidated supervision.This problem involves two aspects: on the one hand,both the EU and the FSB require the information sharing between the home country and the host country’s regulatory agencies under the protection of confidentiality,so China needs to pay attention to the construction of bank secrecy system.On the other hand,when the financial risk of the parent bank is transmitted to the host country through its subsidiaries,it is necessary for host country to take appropriate measures.After 2008,the host country innovated the Ring-fencing principle to isolate the risk of the home bank which is useful for China to supervise foreign bank branch in RMB offshore market.China’s territorial supervision of offshore foreign bank branches must be based on the specific commitment of national treatment made under GATS,which covers continuous supervision,but does not include rescue supervision.The branches of offshore foreign banks are not included in China’s deposit insurance system.Under the vague presumption model of lender of last resort,it is not clear whether China will provide lender of last resort assistance to the liquidity difficulties of the branches of offshore foreign banks and the non local currency debts of offshore foreign banks.The fifth chapter discusses the supervision of capital flow in RMB offshore financial market.This chapter further divides the content of capital flow supervision of domestic RMB offshore financial market and overseas RMB offshore financial market.The dilemma of capital flow management experienced by Malaysia’s offshore financial market in Labuan and the LIBOR manipulation case of European dollar market in 2012 respectively highlight the necessity for offshore market country to supervise capital flow in domestic and overseas markets.According to the national monetary sovereignty,China can manage the capital flow in the domestic offshore financial market,meanwhile China needs to respect the relevant rules such as recent guidelines of the IMF Agreement,and be bound by the relevant provisions of GATS.Within the framework of GATS,China has no specific commitment to market access and national treatment for the cross-border provision mode of the banking industry.Therefore,China enjoys complete capital flow management power for the capital flow involved in the cross-border lending of RMB offshore financial market.In principle,China should not set up capital control measures to restrict the capital inflow of offshore foreign banks in the process of establishing branches.As a result,all cross-border capital flows generated after the establishment of offshore foreign bank branches are entitled to Chinese capital flow management power.A country cannot supervise the circulation of local currency in offshore financial market according to the national monetary sovereignty.With the help of CHIPS,a cross-border payment and clearing financial infrastructure,the United States has expanded its supervision on the circulation of foreign dollars in terms of foreign exchange control and restrictions on the improper use of foreign dollars.In the aspect of foreign exchange control,American courts actively promote the New York law where CHIPS is located to become the applicable law of transactions.According to British and American cases,the foreign exchange control issued by the country where the applicable law of contracts is located is binding on both parties.In terms of restricting the improper use of overseas US dollars,the United States has frozen the funds involved in improper US dollar transactions in the offshore US dollar market through the applicable provisions of CHIPS rules and agency accounts.China should pay attention to the construction of CIPS,which is a financial infrastructure for cross-border payment and settlement of RMB,and learn from the experience of the United States to explore the function of CIPS in supervising the circulation of RMB abroad. |
