Introduction: China Financial Summit 2019, themed at "Making Fintech Serve High-quality Development of the Real Economy", kicked off on October 23 and 24 in Beijing. Guests present at previous sessions of China Beijing International High-tech Expo - China Financial Summit include leaders of China's financial regulation ministries and commissions including the Ministry of Finance, the People's Bank of China, China Banking and Insurance Regulatory Commission and China Securities Regulatory Commission, leaders of the People's Government of Beijing Municipality, executives and management of China's financing institutions including The Export-Import Bank of China, the Industrial and Commercial Bank of China and China Construction Bank, leaders of international organizations including the U.N. Economic and Social Commission for Asia and the Pacific, the World Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the International Monetary Fund (IMF), the Asia-Pacific Economic Cooperation (APEC) and the Organisation for Economic Co-operation and Development (OECD), leaders of national central banks and financial regulation institutions of Germany, Hungary, Denmark, Mexico, Indonesia and Lithuania, executives of international investment banks and famous overseas financial institutions including Goldman Sachs, Citibank, JPMorgan Chase & Co, Morgan Stanley, HSBC, UBS and Standard Chartered, and winners of the Nobel economics prize and famous economists at home and abroad. 

Focusing on this summit, the Green Legal Global Alliance Research Institute shares concerns with all participants about the integration, drive and reconstruction in the era of fintech (financial technology), fintech innovation to expedite the transformation and development of the banking industry, corporate financing and listing, new opportunities for global asset allocation and capital market development, etc. 

Zhu Guangyao, former Vice Minister of the Ministry of Finance, put it that we should be highly on guard against the global negative interest rate.  

The just-concluded Annual Meetings of the International Monetary Fund (IMF) and the World Bank sized up and made an appeal for the increasing downward pressure on the current international economy and trade. All countries across the globe are expected to strengthen policy communication and coordination to cope with challenges together. On October 15, the IMF released its latest global economic outlook forecast, in which it toned down its forecast for global economic growth in 2019 to 3% from 3.2% expected in July. This shows that the global economy is undergoing the lowest growth rate in the last decade since the 2008 global financial crisis. 

What's more challenging is that the IMF cut its global trade growth rate to 1% in 2019. Compared with the already weak global economic growth rate of 3%, the growth rate of the global trade lingers on only 1%, which means that either the global economy or the global peaceful development are putting under major challenges. After analysis of the current international economic and political situation, it is found that the increasing uncertainties of the following four aspects have contributed to the increasing downward pressure on the development of the global economy and trade and therefore we should be watchful of this. 

He also said that the international environment for China's development is going through profound and complex changes, presenting a large number of challenges to China. 

Zhu Guangyao said that we should keep a wary eye on the global negative interest rate. Globally, bonds with negative interest rates, especially government bonds amounting to USD17 trillion, have posed a major challenge to the stability of the global financial market. Under such a context, the policy trends of major monetary authorities, especially the Federal Reserve Board (FRB) and the European Central Bank (ECB) play a critical role. 

Wang Hongzhang, Former Party Secretary and Chairman of China Construction Bank: The functions of banks as a kind of fictitious economy are exaggerated, driving up the financing cost. 

According to Wang Hongzhang, in the face of economic downward pressure, we may exaggerate the functions and multiples of banks as a kind of "fictitious economy". 

"An excess of engagement in internal circulation of credit funds in the financial system provides short-term benefits and pushes up the financing cost of the real economy. What's worse, some listed non-financial companies engage in financial business in a disguised form and employ a variety of illegal means." 

In big cities with booming business, the high profit of the financial industry have induced financial resources to break up with the real economy and turn to the fictitious economy for self-circulation. On the contrast, in regions with poor financial development, there is an absence of financial services, and also financial repression. As a consequence, the demands of the real economy fail to be met, many enterprises are plagued with financial strain and high financing cost, and "financial bubbles" and "financial repression" co-exist. 

He pointed out that the service ability of the current financial system has failed to catch up with the demands of small and medium-sized enterprises and innovative enterprises. 

On the one hand, we have a balance held on deposit of RMB190.73 trillion and it is going up. On the other hand, when it comes to serving the real economy, especially small and micro enterprises, we often get trapped in the lack of money. Small and medium-sized enterprises find great difficulties to get loans from traditional financial institutions, while financial institutions are struggling to get high-quality targets and shortage of assets. Small and medium-sized enterprises find great difficulties to get loans from traditional financial institutions, while financial institutions are struggling to get high-quality targets and shortage of assets. 

Li Lihui, Former President of the Bank of China and Head of the Blockchain Task Force of the National Internet Finance Association of China: The traditional credit model has been kept from penetrating the digital supply chain finance. 

Since the beginning of the 21st century, digital technology innovation has advanced rapidly and been integrated and applied together with other technologies. As a result, it has driven up the production efficiency and resource allocation efficiency. Digitized Internet of Things (IoT) is expected to expand rapidly. According to GSMA's estimation, China's IoT industry scale is anticipated to go up from RMB1.33 trillion in 2018 to RMB1.49 trillion in 2019 and to RMB2.13 trillion in 2022. 

The new generation of IoT will develop reciprocing links among natural persons, business entities, production equipment and living facilities. Among them, many links can give financial transaction functions and establish supply chain finance services. To achieve this, the real right relationship and trust relationship need to be authenticated. The authentication of scaled supply chain finance cannot be realized by traditional authentication systems and commercial credit systems. 

In the last decade, the research and development and experimental application of digital underlying technologies have achieved initial progress in the digital trust field, such as big data, cloud computing, artificial intelligence (AI) and blockchain and all these technologies are expected to be applied in the new generation of IoT and supply chain finance. 

First, the digital technology will be employed to identify the characteristics of people or objects and locate them in time and space. It can also be used to authenticate identity to confirm point-to-point, end-to-end operation rights and control rights; and authenticate objects to confirm the value and ownership of the real right. 

Second, mathematical methods are adopted to address trust issues. The blockchain technology can be utilized to express rules through algorithm routine. As long as a common algorithm routine is trusted, mutual trust can be established and a trust mechanism of "technology endorsement" constructed. Besides, the big data technology can be used to distinguish the credit status of business entities or natural and legal persons, find out credit and tap credit value through data mining. 

The value of digital trust rests in the following. First, zero-day and zero-distance authentication tools can be established in a wide-area and high-speed network to improve the efficiency and reliability of the supply chain finance. Second, trusted ties can be formed in an environment where the trust is unknown or weak, saving both time and cost required for credit formation and increasing business credit to a certain extent in a certain range. 

Pan Guangwei, Secretary of the Party Committee and Full -Time Vice President of China Banking Association:  The digital transformation of the banking industry is confronting challenges and the organizational mechanism is not adapted. 

Pan Guangwei pointed out that the digital transformation of the banking industry are confronted with four challenges. 

First, in the process of digital transformation, traditional banks are still locked in unclear strategy, relatively solidified thinking culture and inadequate adaptation of organizational mechanism, etc. Second, there are still vulnerabilities in data governance, industry-finance integration, compliance technology and other aspects. Third, no enough attention is paid to potential risks of fintech. Fourth, there is a scarcity of inter-disciplinary talents who are either skilled in banking business or technology. 

He also mentioned that financial innovation and technological progress complement each other and that finance is a powerful impetus to economic growth and technological progress. 

The financial industry, especially the banking industry, is either capital intensive, or information technology and talent intensive. Each leap of its growth curve is along with the upgrading and iteration of science and technology, which coincides with the definition of fintech by the Financial Stability Board that "fintech is financial innovation driven by technology, produces new business models, application technologies, business processes or innovative products, and then exerts a great effect on the supply of financial services." 

Helmut Ettl, Chairman of the Board of the Austrian Financial Market Authority (FMA) and Member of the Steering Committee of Single Regulatory Mechanism of the Eurobank: New technologies such as cryptocurrencies have not been well regulated. 

According to Helmut Ettl, we need to make a proper examination of the existing regulatory procedures and advance more ideas for future regulation. 

At present, these technologies have not been put under enough regulation, so from the perspective of our regulatory system, these new technologies represent gaping holes, such as these cryptocurrencies and some other products under regulation.  For example, payment products or securities have a totally different picture. In fact, some laws or relevant expansion systems have taken these into account. That is, the authorities have come to realize the seriousness of this problem. So when we carry out reforms, we must note how to better use the so-called neutral logic of technology. 

Source | finance.sina.com.cn