Author(s)

Zhu Qian

Corresponding Author

Zhu Qian

ABSTRACT

In order to solve the problem of poor liquidity of commercial instruments caused by credit default, the People's Bank of China (the central bank of PRC, hereinafter referred as “PBC”) uses the principles of trust law to separate the beneficiary rights from the collective negotiable instruments assets under the premise of the state's control of Non-financial-institutional broker and investment on negotiable instrument(under the legal regime of PRC, the negotiable instruments such as commercial instruments only could be used as the payment instrument and brokers without government permit are forbidden ), and the depository institution issues beneficiary certificate- Standardized commercial instruments to promote the circulation of commercial instruments with so called “demand-driven” methods. However, this new type of beneficiary certificate which directly created by government regulation conflicts with the principles of Law Trust, Law of Negotiable Instruments, and Securities Law and relevant regulation while Standardized commercial instruments removes the functions of payment and settlement and credit enhancement by endorsement. The root cause of the poor circulation of commercial instruments in market in PRC actually is the imperfect credit system, which should be resolved by improving the system of issuance, acceptance and exchange guarantees and allowing investment on commercial instruments.

KEYWORDS

Standardized commercial instruments, Beneficiary certificate, Conflict with legal regime