The country's central bank is accelerating efforts to promote amending of the Law of the People's Republic of China on the People's Bank of China, said Liu Honghua, head of the PBOC's legal affairs department, in an article.

By making this move, the PBOC, the central bank, will better perform its duties in making overall plans for systemically important financial institutions and financial holding companies, regulating important financial infrastructure, and being in charge of comprehensive statistics of the financial sector, said Liu in an article published on Wednesday on China Finance, a Beijing-based semimonthly journal.

Liu Junhai, director of the Business Law Center at the Renmin University of China, said the amendment of this particular law is necessary for the PBOC to perform its duties according to the law, improve China's financial legal system, maintain financial safety, prevent financial risks and further promote the rule of law and the internationalization of its financial market.

"In order to maintain asset safety and the integrity of systemically important financial institutions and financial holding companies and ensure that each one does its duty and plays its proper role, it is highly important to make certain that they will obey the rules. Therefore, the PBOC wants to see this clearly defined in the Law of the People's Republic of China on the People's Bank of China," Liu said.

The PBOC announced on Oct 23,2020 that it started soliciting public opinions on the draft amendments to this law, which was passed in 1995 and amended in 2003.

Dong Ximiao, chief researcher at Merchants Union Consumer Finance Co Ltd, said: "As major changes have occurred in the international and domestic financial environment, keeping pace with the times, amending the law, and strengthening the PBOC's duty in macroprudential regulation will create a more favorable legal environment for financial risk prevention and mitigation. It will also help promote the financial sector to better serve the real economy."

It is expected that the law, once amended again by the legislature, will clarify the PBOC's duty in regulating and managing systemically important financial institutions and financial holding companies, said Yang Haiping, a researcher at the Central University of Finance and Economics' Institute of Securities and Futures.

By amending the law, China will also establish financial laws' validity of jurisdiction regarding illegal activities conducted by overseas financial institutions in the country and build a mechanism of penetrating supervision on overseas shareholders, actual controllers and beneficial owners of the financial institutions that are set up by or have sold their shares to overseas FIs in China, said the PBOC's Liu in the article.

Yang said such efforts will have a significant meaning for protecting the legal interests of domestic financial entities, ensuring orderly operations of China's financial market, and preventing manipulative behavior of overseas shareholders, which may bring negative effects to financial stability.