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)
