The Financial Stability Law's second draft was submitted for review on June 25 at the 10th session of the 14th Standing Committee of the National People's Congress (NPC). This draft introduces clear definitions of the central financial regulatory bodies and their responsibilities, alongside significant enhancements in financial risk prevention and management.

Since the initial review of the draft at the 38th session of the 13th Standing Committee of the NPC in December 2022, extensive feedback from various stakeholders has been incorporated. The NPC Constitution and Law Committee has conducted a comprehensive review, resulting in the revised second draft presented for further consideration.

This iteration of the draft specifies the roles of central financial regulatory bodies in the "General Provisions" section, moving away from the previous version's focus on the National Financial Stability and Development Coordination Mechanism. It mandates that all financial activities be subjected to supervision, emphasizing comprehensive oversight, including institutional, behavioral, functional, and continuous supervision, along with supervisory accountability. This approach aims to bolster supervisory capacity and coordination.

Financial institutions and business activities must obtain approval from the State Council's financial regulatory departments in accordance with laws and regulations. The draft also assigns responsibilities to relevant State Council departments and provincial governments for preventing and addressing illegal financial activities, thereby reinforcing the financial risk prevention system. This includes enhanced monitoring, identification, warning, and early correction of financial risks.

Furthermore, the draft clarifies the roles and responsibilities of the State Council's financial regulatory departments, provincial governments, and other related departments in resolving financial risks. These adjustments ensure alignment with existing financial laws, such as Law on the People’s Bank of China, Commercial Banking Law of the People’s Republic of China, Banking Supervision Law of China, Securities Law of the People's Republic of China, and Insurance Law of the People’s Republic of China .

Overall, the second draft of the Financial Stability Law represents a significant advancement in establishing a robust and coordinated financial regulatory framework in China. By focusing on comprehensive risk management measures, it aims to enhance the stability and resilience of the financial system.