Chairman of China Banking Regulatory Commission (CBRC) Liu Mingkang
Thursday outlined the commission's objectives for regulation and
supervision at a press conference in Beijing.
The four objectives are defined as follows: First, to protect the
interest of depositors and consumers by way of prudential and
effective supervision. Second, to maintain market confidence again
by way of prudential and effective supervision. Third, to promote
the public understanding of modern finance by way of education.
Fourth, to seek to reduce financial crime and maintain financial
stability.
In
the pursuit of these objectives, Liu stresses that the CBRC should
continue to assess its performance against six principles of good
regulation. These are: (1) to maintain financial stability and
facilitate innovation; (2) to enhance international competitiveness
of China's financial sector; (3) to ensure that regulations are
appropriate and reasonable and remove all the unnecessary controls;
(4) to encourage fair but eliminate disorderly competition; (5) to
subject both the regulator and regulated institutions to a
well-defined system of accountability; and (6) to use supervisory
resources in a most efficient and economic manner. The CBRC's
mandate is exercised in the interest of the people and for the
people.
Following years of painstaking effort, a wealth of experience has
been gained in the area of banking regulation and supervision, Liu
said. Such experience, according to him, can be summarized as
follows:
First, is the emphasis on consolidated supervision for the purposes
of better assessing, monitoring and controlling the overall risk of
each financial institution.
Second, all the regulatory and supervisory efforts should be
risk-based with consistent enhancement of supervisory effectiveness
by way of improving supervisory skills and methodologies.
Third, banks should be encouraged to improve their internal
controls.
The last is the gradual improvement of regulatory and supervisory
transparency.
CBRC will promote regulatory transparency and will issue
accordingly all the rules and regulations for public consultation
before they are finalized. It is subject to the monitoring by the
industry, general public and news media, Liu said.
At
the press conference sponsored by the State Council Information
Office, the CBRC head also briefed the press on the major
responsibilities of CBRC which was officially established on April
29.
He
said that CBRC is a government agency under the State Council and
is responsible for the regulation and supervision of banks, asset
management companies, trust and investment companies as well as
other deposit-taking financial institutions. Its major
responsibilities include:
- To formulate supervisory rules and regulations for banking
institutions
- To authorize the establishment, changes, termination, branching
and business scope of banking institutions
- To conduct fit and proper tests for directors and senior
managers
- To conduct off-site surveillance and on-site examinations of
banking institutions
- To investigate, penalize and take enforcement actions on
activities that violate relevant laws and regulations
- To compile and publish statistics and reports of the overall
banking sector in accordance with relevant regulations
- To prepare proposals on the resolution of problem
deposit-taking institutions in consultation with relevant
authorities
- To be responsible for the administration of the supervisory
boards of the state-owned financial institutions
- To perform other duties assigned by the State Council
The CBRC comprises fifteen departments and will set up banking
bureaus at the provincial level, banking sub-bureaus at the
prefecture level, and efficient resident offices at county
level.
(China.org.cn May 29, 2003)