2018-3-22
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[Beijing News] Margaret Leung and Other CPPCC Members Talk about Internet Finance
Release Date:2014-03-12 15:45:23

What’s the risk of Yu’E Bao and other Internet finance products? How shall they be regulated? How long can their high gains persist? Beijing News reporter interviewed a number of the CPPCC members in the finance investment field for their comments. For how to plan funds by young people, they also put forward their own proposals.

1. What’s the risk of Yu’EBao?

Mei Xingbao: to Internet finance enterprises, risks exist in three main aspect. First , information security. What if the computer is hacked, or cell phone lost, or password leaked? Second, financial service . Generally speaking, guarantee is required for deposits to prevent the failure of cashing by the "bank". The bank has deposit reserve to guarantee the interests of depositors, while Yu’EBao does not, which is a risk. Third, currently the state doesn’t have sufficient control indicator and technical means on Internet finance enterprises.

Huang Xiaofeng: The bank is safe enough, but the gains is too low. To investors, especially small investors and civilians, security is first. I think an Internet finance enterprise needs to better protect financial security for investors. But more importantly, investors need to weigh up security problems on their own.

Margaret Leung: A return of 5% - 6% is very high, which is twice the gains of fixed deposits. To ensure such gains for investors, the enterprise has to get 10% gains. How can they get such high gains from their investment? High risks always come along with high return!

Innovation also requires regulation. I think the mainland compatriots pay not enough attention to risks. They just know about high return, but how to do when a problem arises? Education for investors is very important. For example, for travelling abroad, insurance is needed or not; does the airline have good security? Everyone does not seem to care about safety. They only pay attention to the price. The government can implement more education in this aspect.

Zhu Zhengfu: The risk primarily concerns safety. After all, it is new, without a long time of experience, and different from the bank. Over the years, the bank has accumulated certain experience in security. But I support Yu’EBao. I think as long as security problems are solved, Internet finance can break the current financial monopoly.

2. How long can the high gains of Yu’EBao adhere?

Mei Xing Bao: With the marketization of interest rate and the increase of bank deposit interest rates, people will no longer put their money into Yu’EBao, and the gains rate will certainly continue to drop.

Margaret Leung: It will not last long. Because it is a new popular project, Internet enterprises are willing to invest more for more return to investors, so that more people will invest to expand the project. So in the beginning, the enterprise will give, even if it will bring in loss. Otherwise it cannot grow up. But in the long term, it cannot have such high profit.

Zhu Zhengfu: It is difficult to maintain at the level of 6%- 7% for long term, but one thing is for sure: it will be higher than the current bank deposit interest rate, because the current interest rate is too low.

3. What’s do you think of the relationship between Yu’EBao and the bank?

Mei Xingbao: Internet finance is among shadow banks, and according to the generally accepted concept of shadow banks, the shadow bank is an intermediary activity of finance not regulated or evading supervision. The Internet finance including Yu’Ebao does not evade supervision, but has some business innovation in the observation period of regulatory authorities with tolerant attitude, and specific regulatory measures have not yet been introduced. But its risk shall also be reminded in timely manner. For Internet enterprises, they shall comply with relevant basic requirements, and conduct financial service with respect to the relevant provisions of the finance business.

Margaret Leung: Their platforms are not equal. They make investment by collecting money and issuing loan, but one is under great regulation, the other one is not regulated, which is not equal. I suggest that the government should establish an institution for regulation so that their operation can guarantee investors.

4. Is the end for the bank to make money without effort?

Mei Xingbao: Yes, the bank must transform its way of management. Making money without effort is the result of interest difference. Currently, there’s still profit space for interest difference. But more intermediate business and finance favorable to people shall be developed in the future.

Internet finance also forces the reform of the bank, promoting the bank to change its business idea and way. The bank is now learning client idea from Internet enterprises, and the close relation with several big bosses no longer means good public relations. The bank's superiority shall also be used to attract funds. For example, the bank will take the initiative now to send text messages to clients, and those financial products have gains rate of more than 5%.

Zhu Zhengfu: The bank has to change its way to survive. In the past, the bank can make profits by deposits and loans, but in the future the bank should rely on service to make money, rather than interest difference, and foreign banks rely on service to make money.

[Q & A]

● Do you or your family use Yu’EBao? How much is your investment?

Mei Xingbao: I do not use it, but my family do. They’re the younger generation. I don’t know how much they invest. They did not tell me.

Huang Xiaofeng: no. I don’t use it, nor my family.

Margaret Leung: I do not use it, but my daughter will use the network bank.

Zhu Zhengfu: I have not used it yet, because I am a director of a funds company. I put money in funds. But I use the red envelope of We Chat.

● Do you support your family to use Yu’EBao?

Mei Xingbao: It can be used, but only with part of the idle funds, not all of them. For example, 20% of cash on hand can be put in it. As engaged in finance, we pay particular attention to asset allocation. This is related with risks. Even if risks arise, only 20% will be affected. I suggest you do so.

Huang Xiaofeng: I do not care about it.

Margaret Leung: It can be used.

● For young people, do you have any recommendation on money management?

Mei Xingbao: As to money management, half of the money should be put into proterty, such as real estate. Part of the next half can be put into national bonds and a part in bank financing, with 10 percent for emergency needs.

Huang Xiaofeng: Now it’s better to find a safest place to put money.

Margaret Leung: I think young people can be a little more aggressive, and put more money for investment, because you have plenty of time to make money, and you can assume a bigger risk. And the older people shall be more conservative to ensure the safety of funds.

Zhu Zhengfu: For small sum of money, it can be be placed in the Internet finance. The bank’s interest rate is too low anyway. For big sum of money, you’d better make investment and it’s better to put it in the funds. One-third of my investment is in funds enterprises, one-third in real estate, with a small portion for foreign exchange, and a small part for normal use.

Beijing News reporter- Lin Qiling, intern- Zhang Chen