BEIJING, April 7 (TMTPOST) — The Financial Stability Legislation drafted by the People’s Bank of China and other relevant authorities is now seeking public opinions, Chinese state-owned media Xinhua News reported, citing The People's Bank of China.

The draft bill clarifies the responsibilities and role of the Financial Stability and Development Committee and proposes to set up an external cash pool and a foundation for financial stability.

There is a lack of holistic design and comprehensive coordination between industries and government departments when it comes to financial stability, as relevant terms are distributed loosely among multiple laws and regulations, the People's Bank of China said in a statement, elaborating the background of the financial stability legislation.

The People’s Bank of China said that the bill was drafted to establish a long-term mechanism to ensure financial stability. The central bank said in the statement that the financial stability coordination mechanism should be responsible for the reforms and development of finance and financial stability in China. The mechanism shall be tasked with missions to study major policies related to financial stability and implement measures to prevent and handle financial risks.

In addition, the draft bill also calls for the establishment of a foundation for financial stability. The central bank said that the foundation will comprise of funds from financial institutions financial infrastructure and the other funding sources defined by the State Council. The foundation will be under the management of the Financial Stability and Development Committee under the State Council.

The draft bill also clarifies that illegal actions that result in the occurrence or spread of financial risks will face legal punishments.

Without approval, no entity and individual are allowed to set up financial institutions or engage in financial services and activities, the draft law states, mandating licenses for financial operations.

The bill was drafted to build an effective and efficient financial stability mechanism to protect China’s financial world and prevent systemic risks, the People’s Bank of China said.