Leiden Law Blog

New Bank Insolvency Law for China and Europe

New Bank Insolvency Law for China and Europe

In February 2014, the China University of Politics and Law (Beijing, China) and Leiden Law School’s Hazelhoff Centre for Financial Law launched the innovative research project New Bank Insolvency Law for China and Europe. Standing in the spotlight of the Chinese and European legislators, bank insolvency law is unequivocally a subject of major economic, social and political relevance.

The common objective of policy makers, after having witnessed banks toppling over during the past seven years, is to enact rules which allow banks to fail in a predictable and orderly manner, whilst protecting their critical functions such as payment services and consumer deposits. China and Europe can learn from each other when developing rules to govern the recovery and resolution of banks. In this respect, the long-standing academic cooperation between CUPL and Leiden Law School has proven to be an excellent foundation for the joint research project that addresses the main question: how to best achieve a modernized bank insolvency regime for China and the EU.

Researchers from both universities are taking part in the project. From CUPL, Prof.  Kong Qingjian, Prof. Xiaobo Fan, and Mr Huayi Yu report on the Chinese bank insolvency regulations. On behalf of Leiden Law School, Prof.  Matthias Haentjens, Prof.  Bob Wessels, PhD candidates Ms Lynette Janssen and Ms Yanying Li, and research assistants Ms Magda Wistuba and Ms Michelle Leung detail the rules governing bank insolvency law on a national Dutch and a European level. The project has been made possible by a grant from the Royal Dutch Academy of Sciences (KNAW) in the context of its China Exchange Programme.

Furthermore, an Advisory Board has been established. Its members are Dr. Nout Wellink, board member of Bank of China and former president of the Dutch Central Bank, Prof. Yuwen Li, Director of the Erasmus China Law Centre, Dr. Michael Shillig, senior lecturer at King’s College London, and Mr Armstrong Sheng Chen, Deputy Director of the China Banking Regulatory Commission. Their contributions consist of advice on for example the structure of the reports to be written. Also, the opinions and remarks from the Board will undoubtedly prove to be of great value in our ongoing interaction.

As the project is advancing well, we are pleased to announce that Inventory Report I is nearing completion. The Report contains an overview of the existing and future rules, in the field of European and Chinese bank insolvency law. We have explored nine main subjects, concerning, inter alia, several European regulatory initiatives, Deposit Guarantee Schemes, and a detailed account of relevant contract law, corporate law and (international) insolvency law. Additionally, part of the report delves into international perspectives, principles and standards.

The results of the findings are to be the focal point at a seminar, which will take place on 26 and 27 March 2015 in Beijing. In this meeting, eminent experts will be invited to discuss these results. We believe this discussion will greatly enrich the academic debate and research in this area. More specifically, it will be a useful stepping stone towards the second Inventory Report, as at this seminar, topics discussed in Report I will be selected for further investigation.

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