On The Legal Issues Of Internal Control Of The Commercial Banks

Instability is the inherent feature of commercial banks, so to ensure them operate safely is of great significance. Therefore, most of the western countries establish the mechanism which combines the internal control, official supervision and marketing restriction altogether. However, internal element is primary; to improve the internal control system is the foundation to perform the official supervision and marketing restriction functions efficiently. With the financial innovation and economy globalization, the banking supervision institutions worldwide put great emphasis on internal control. Internal control system is no longer the self-governance scope of commercial banks; it becomes part of regime of law. Our state legislation has already regulated the commercial banks'internal control according to the Basel Committee's request, however, there are many flaws need to rectify. Thus, to improve the commercial banks'internal control system is very important.This paper is on the purpose of how to improve the commercial banks'internal control legal system. The paper makes the analysis on the internal control theory as the basic part, and then by analyzing the regulations of our country and foreign countries, digs the defects of our commercial banks'internal control system in order to give some legal suggestions as to solve the practical problem.This paper is divided into four parts. The first part analyzes the instability of commercial banks, so internal control legal system is necessary, and then introduces the theory of internal control and its development. Considering the internal control system in developed countries is worth learning, the second part focuses on the internal control in Japan and U.S.A... Through introduction and comments, hopes to be reference to our country's legislative practice. The third part concerns with the present internal control legislation and legal practice of commercial banks in our country, analyzes the defects of internal control, make preparation for giving suggestions. The forth part gives suggestions according to the defects mentioned above. The suggestions include premise of legal regulation, the concepts, the specific measures and related legislations. At the end of the paper is the author's conclusion.