Banking Supervision In China In Framework Of Basel Accord

China Banking Regulatory Commission (CBRC) was founded at April,2003. Law of the People’s Republic of China on Regulation of and Supervision over the Banking Industry was in application since01/02/2004. The new era began since then. During the8years after the foundation of CBRC, China’s Banking industry has experienced the rapid growth driven by the development of economy, while the institution of CBRC been kept improving and the ideological framework of banking supervision which reflects the reality of banking industry in China.It is the crucial issue to align China’s banking supervision system with the principles of international banking supervision system."Aligning with" isn’t equal to "Accepting all", but fulfilling the regulation and supervision scientifically, formally and institutionally under the evaluation on the effectiveness and efficiency of China’s banking supervision system, considering both the present status of our banking industry and the basic framework of international banking supervision system and its trend."Aligning with" isn’t the target, but conforming our banking industry with the international banking industry to serve the improvement on innovation, services and competitive advantage of our banking system on the support of both the domestic and international market.On the foundation of reviewing on banking supervision theories, this dissertation,"Implementation of Banking Supervision in China In Framework of New Basel Accord——On the Perspective of Theoretical Changing On Banking Supervision", follows two paths:firstly, the narration of changing of the Basel Accord and the evolvement of international banking supervision system. The purpose of this path is displaying the historical outlook on the evolvement of international banking supervision system and framing its trends, and in advance, probing the correlation between the practices and theoretical research of international banking supervision. Secondly, displaying the historical outlook and present status on the evolvement of banking supervision in China. The purpose of this path is narrating the historical outlook, analyzing the key issues that is necessary to deal with seriously, and the possible reform which needs to be implemented for the purpose of aligning with Basel Ⅱ.This dissertation includes6sections. The main content of each section is as follows.Section1, Preface. Brief introduction of the background, importance, methodology, main ideas, possible innovation and flaws, key words.Section2, The changing of theoretical research on banking supervision. After brief reviewing the changing process of banking supervision, the changing logic is discussed, the topics of why, by who and how the bank should be supervised are analyzed. The literatures on objectives of supervision and CBA approach are reviewed.Section3, The changing and implementation of Basel Accord. The implementation and changing of Basel Accord are reviewed, introduced, compared and analyzed.Section4, The argument and reform of banking supervision on the backdrop of global financial crisis. The argument and reform of banking supervision on the backdrop of global financial crisis are narrated and analyzed.Section5, The present status of banking supervision system in China. The evolvement, present status and key issues of banking supervision in China are discussed.Section6, Reflection on the reform of banking supervision in China aligning with the Basel Accord Ⅱ. On the backdrop of development of banking supervision in China, the main trends of reform that would emerge in banking supervision according to the Basel Accord Ⅱ are discussed.The main methodology applied in this dissertation includes historical analysis, institutional analysis, comparative analysis and literatures reviewing, etc.This paper may be an important innovation in accordance with the degree of severity of light arranged mainly in the following aspects:1. New viewpoints:Loss, the adopted meaning of risk, should be replaced by the risk premium that includes both the loss and the gain. And focusing on the risk theories, the foundation of banking supervision should be structured. The transformation of banking supervision mode from risk-based to risk-oriented is brought up.2. New viewpoints:the essential approach of controlling systematic risk is developing incentive-compatible regulation, so that the correction of information asymmetric between consumer and banks could match the risk avenue and risk taking, push the low cost capital structure emerged endogenously, and consequently, maximize the social welfare.3. New viewpoints. The cycle model of crisis-drove and institution-adjusted that is the usual track of changing of Basel Accord should be reconsidered. By the development of banking supervision research and the application of its fruits, invest more resources of banking supervision into the risk accumulation and cut-off mechanism of risk conduction. It is unwise choice to depend on the bank itself to cut off the risk conduction since the supervising authorities concern banking industry and marcoeconomy situation more than single bank.4. New viewpoints:As the subjective of risk transaction, banks and non-bank institutes do have the incentive and possibility to replace cost ex post by risk ex ante when the tool of risk transaction is available. If the trade-off mechanism between risk ex ante and cost ex post couldn’t cut off, the risk dispersing process would be twisted as a rent-seeking process, the risk dispersing mechanism, which is reasonable theoretically, would become the vicious cycle with scale expanding continuously. Theoretically, the reform of banking supervision should focus on this trade-off.5. Perspective Innovation:The banking supervision is the field depending on practices. In the recent literatures, more researches focus on probing into the improvement of banking supervision system in the process of practices. In brief, it’s a procedure of induction. In this dissertation, focusing on the risk theories, the foundation of banking supervision theory is emphasized. On this foundation, the reform of banking supervision is discussed systematically. It’s a procedure of deduction rather than induction formerly.