Research On The International Coordination And Cooperation Of Banking Supervision

At the background of financial globalization, financial system evolved greatly. Sincecross-border banks developed rapidly, financial crisis were prone to be transmitted crossborders and systematic risk emerged frenquntly. The globalization of financial businessand local banking supervision conflicts severely, which calls for the coordination andcooperation of banking supervision among different countries. International institutions(e.g. Basel committee) that issued many international standards and codes take importantrole in the international coordination and cooperation of banking supervision. The themeof the dissertation is to study the background, mechanism, contents and effects of theinternational coordination and cooperation of the banking supervision guided ororganized by the Basel Committee. At the end of the dissertation, some strategies andsuggestions have been put forward for China.The international coordination and cooperation of banking supervision developedagainst the background of financial globolization. Since the1980s, the tide of financialliberalization promoted the financial globalization, during which the capital flowedinternationally in a large scale. The benefit of the globalization was to promote theeconomy growth, but the cost was the frequently-happened financial crisis. That is to say,the large scale of international capital movement contributed to the high probability offinancial crisis. The financial systematic risk that is consist of time-series risk(procyclicality) and cross-boader risk became more severely in recent yearsThe theme of the dissertation is to study the international coordination andcooperation of banking supervision under the guide of the international standards andcodes stimulated and issued by the Basel Committee. Historically, Bank failures andfinancial crisis were the impetus of the evolution of international coordination andcooperation of banking supervision. The evidences were: Herstantt bank failurepromoted the birth of Basel committee (BCBS), BCCI failure helped the establishment ofconsolidated supervision principle, the “New international financial architecture” was putforwarded after the Asian crisis. International Standards and Codes are soft laws, whichwere set by international institutions (such as the Basel Committee) and implemented bycountries on the volunteer basis. However, many developing countries did not join thediscussion during the setting of the standards and codes. In order to be recognized as a prudential and reliable banking sector, more and more countries strive to implement thestandards and codes.The content of the international coordination and cooperation of bankingsupervision consist of two parts: the one is the supervision of cross-boader banks; theother is the implement of international standards and codes. The home and hostsupervisors need to coordinate and cooperate in the supervision of cross-border banks onthe consolidated principle. The desertation analysis how to coordinate and cooperate forhome and host supervisors to supervise the cross-boader banks effectively and efficiently.The international standards and codes initiative can promote the financial infrastructures.The standards setting institutions organized some standards and codes assessmentprogram (e.g. FSAP), which are taken as “diagnose tool”, to help supervision authority toenhance supervision capacity and to promote the financial soundness of the wholecountry. In order to be accepted by international finance market easily, it is the bestchoice for the developing countries to implement international standards and codesactively.The empirical study about the effect of international standards and codes aboutbanking supervision give us two conclusions. The implementation of standards and codes(e.g.《The Cole principals on the effective banking supervision》and《Basel Ⅱ》) canhelp to upgrade the financial infrastructures and the risk management of banks, which arethe necessary condition (not the sufficient condition) for financial stability. If all thebanks follow the international standards and codes simultaneously（e.g.《Basel Ⅱ》），thecredit supply will procyclically fluctuate.At the end of the dissertation, some strategies and suggestions are made for Chinato deal with the procyclicality of capital requirement, to choose the appropriatemacroprudential supervision tools and regime, and to supervise the global and domesticsystematic important banks effectively.