Internet finance development needs a solid rule-of-law foundation

On July 18, the People's Bank of China, the Ministry of Industry and Information Technology, the Ministry of Finance and seven other ministries and commissions jointly issued the Guiding Opinions on Promoting the Healthy Development of Internet Finance, setting out clear provisions for major Internet finance business forms such as Internet payment and online lending. This move means that Internet finance will enter a track of rule-of-law-based and law-based regulation, and enter a stage of standardized development.

In recent years, Internet finance has developed with great momentum, and it is also of great benefit to meeting the financing needs of the development of our country's agriculture, rural areas and farmers. But while it vigorously promotes reform and innovation in the financial system, it has also brought some problems and hidden dangers that cannot be ignored, such as the industry's development being “short of thresholds, short of rules, and short of supervision”; hidden dangers exist in the safety of customer funds, and there have been multiple cases of operators “absconding with the funds”; and the internal control systems of practitioner institutions are not sound, with operational risks existing. Compared with traditional financial models, Internet finance, because it uses new technologies such as big data, mobile Internet and cloud computing, can more conveniently realize fund circulation, payment and investment, and its service costs are lower, which is conducive to entrepreneurship. But as a new thing, the risks of Internet finance are also obvious, especially in the realistic context of there being no systematic legislation for Internet supervision and a “nine dragons managing the water” regulatory model, the many potential risks of Internet finance are more likely to disrupt normal market order.

At present, the root cause of undesirable phenomena such as “fishing in troubled waters” in the Internet finance market lies in the fact that laws and regulations still need to be improved, as well as the lack of standardized and orderly supervision. The relevant opinions on Internet finance supervision issued by the ten ministries and commissions this time clearly require that future supervision of Internet finance should both streamline administration and delegate power to implement “broad supervision”, and also “clarify the bottom line of risk, protect lawful operations, and resolutely crack down on illegal and non-compliant acts”. Throughout, it reflects a strong awareness of using the cornerstone of the rule of law to promote the healthy and orderly development of the Internet finance market, and it will surely help end the “barbaric and willful” growth of Internet finance, pushing it to operate in a standardized way on the track of the rule of law.

As early as the beginning of July this year, the Guiding Opinions on the “Internet Plus” Action issued by the State Council clearly proposed accelerating the construction of laws and regulations in the “Internet Plus” fields including Internet finance, so that the rule of law becomes a firm cornerstone for the sound development of Internet finance. To promote the healthy development of Internet finance, on the one hand, it is necessary to strengthen investigation and research, and scientifically assess in a forward-looking way the constraints affecting the healthy and standardized development of Internet finance, so as to improve relevant laws and regulations in a targeted manner, and let complete and systematic laws and regulations hold up a protective umbrella for the sound development of the burgeoning Internet finance. On the other hand, the relevant responsible departments with regulatory duties over Internet finance must adhere to the rule-of-law way of thinking, regulate the operation and management of Internet finance in accordance with the law, and at every step examine whether the relevant legal system still needs improvement, and promptly correct Internet finance business activities that deviate from the track of the rule of law in accordance with laws and regulations, so that the rule of law becomes the source of strength for the standardized and orderly development of Internet finance.

Solidifying the rule-of-law cornerstone of Internet finance is a complex systematic project, and it cannot be achieved overnight; it requires continuous and sustained effort. Only in this way will the positive energy of Internet finance in promoting better development of finance and even the entire economy be fully released, and the indestructible cornerstone of the rule of law truly protect its healthy development, thereby ensuring that it truly becomes a brand-new platform for entrepreneurship and for stimulating market vitality.