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Internet-led financial innovation key to structural reforms[1]- Chinadaily.com.c [Copy link] 中文

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Post time 2016-3-3 12:20:06 |Display all floors
An advertisement of Alibaba's financial arm Ant Financial in Hangzhou, capital of East China's Zhejiang province. [Long Wei/For China Daily]






China's monetary easing policy to ensure ample liquidity in the financial system is welcome, but the fact remains that only more Internet-driven financial innovation can help such a favorable financial environment boost the country's job-creating small  ...

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Post time 2016-3-3 12:20:07 |Display all floors
My proposed privatization model, SPS model, for SOEs is still my preferred and best recommendation for SOE reform. However, for State-owned banks, an alternative can also be considered. There's a school of economists who contends that since the gaming rules of the banks are essentially a creation through legislation (for example RRR, Capital Ratios etc.) and their sources of funding are largely from customers deposits, then the banks should actually be mutualized or put on a mutual ownership model i.e. ownnership by their customers. In fact many of the early western banks were mutual savings banks. However, later on, these mutual banks encountered problems of raising large needed capital quickly for growth, thus resulting in this model being gradually abandoned. However, I would suggest that this model can be revived by incorporating my SPS scheme i.e. needed capital can be secured through issuing Preferred Shares to investors, both private and public. Bank earnings then can be first distributed to pay preferred shareholders' interests and the remainder can then be distributed to customers as in the mutual model. The mutual model has also the benefit of customers participation and supervision.

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