regarding the insolvency criteria, the draft law lists enterprises failing to repay due debts and failing to repay all debts with their assets ( in evident insolvency ) both as tests for insolvency, which will undoubtedly impose negative impact on the protection of the claims of financial institutions. giving priority to employee entitlements over secured debts, which increases the difficulties for the recourse of banking claims and lowers the recovery ratio of non - performing assets, will weaken the ability of financial institutions to dispose of non - performing assets and lead to financial risks. in addition, underprotection of the secured debts will damage the basic principles of laws and the confidence of economic entities in the security system as the last protection. law also represents a faith. without a confidence in the law, even the most prudent and systematic law will become a mere scrap of paper. however, the excessively strict tests of insolvency make creditors unable to apply for effecting insolvency of the debtors timely and effectively. taking “ inability to repay all debts with assets or in evident insolvency ” as the criteria will prevent the enterprises from entering the bankruptcy procedures until they become absolutely insavable. under this circumstance, the opportunities to restructure or reconcile the insolvent enterprises will be missed, resulting in a failure to provide maximum protection for the creditor ’ s rights. third, weakness in criminal liability investigation for financial frauds and irregularities exposes financial institutions to operational risks. the frequent occurrence of operational risks is one of the big problems for china ’ s financial sector. in particular, financial frauds and irregularities have caused great losses to financial institutions. based on the analysis of recent cases, financial frauds in china could be divided into two categories : one is to provide false information for the purpose of illegal possession, such as frauds in letter of credit or negotiable instruments ; the other is to swindle money by deliberately providing false financial information to benefit the enterprises instead of illegal possession. in the latter case, the use of the funds stated by the loan applicant is true ; however, the applicant may deliberately submit false information to the financial institutions that can mislead the banks ’ decision in credit authorization. currently, most of the frauds fall into the second category. in the criminal law, there are clear provisions on financial frauds aiming at illegal possession. however, there ’ s no stipulation for frauds under the

our economy more productive and to avoid adverse distributional effects. 1 / 4 bis - central bankers'speeches monetary policy cannot be targeted and tailored in the way that fiscal policy can, nor has the mandate to address distributional concerns. but monetary tightening could be complemented with changes in the composition of fiscal spending, where the available resources are better targeted to those most in need of support. inflation imposes a burden on the poorest households disproportionately ; and, in the short term, monetary tightening may add to this burden, by constraining aggregate demand and labour market conditions. a better composition of fiscal spending is essential to protect the economy from the risk of poverty and excessive income inequality. the fiscal policies that we are seeing in action are not sufficiently adhering to these principles. in the euro area, the fiscal response to the energy crisis has been large, amounting to nearly 2 per cent gdp in 2022 with a similar figure expected in 2023. while difficult to classify precisely, about half of the total support in the euro area over the 2022 - 23 period is assessed as affecting prices directly, via lower marginal costs of energy consumption, with income measures making up the remainder. only about 12 per cent of the total support is estimated to be targeted at vulnerable households and, to a smaller extent, firms directly affected by higher energy prices. 1 such untargeted spending is increasing demand and directly contributing to inflationary pressures. price measures and energy price discounts may have contained prices initially, but they are costly to the budget and prevent often necessary demand adjustments. most importantly, by contributing to higher and more persistent inflation over the medium term, their longer - term effectiveness is questionable, at best. the outlook for public finances can rapidly change. monetary tightening has not yet adversely affected public debt sustainability. this is largely due to the initial positive impact that inflation tends to have on the public finances. higher prices have a favourable impact on government revenues, both via higher indirect taxes – such as vat and excise – and direct ones – the impact of fiscal drag on the income tax. together with the higher revenues, a rise in nominal gdp owing in large part to high inflation has led to significant decreases in debt - to - gdp ratios that had reached historically - high levels after the pandemic. deficits, however, continue to be too high. in the fourth quarter of 2022 the deficit - togdp ratio stood at 4. 7 % in the