A Study On Supervision Over Foreign Banks In China

With financial globalization and liberalization, international capital flows is accelerating, and the foreign banks are continuously expanded. Since Reform and Opening-up policy was practiced, foreign financial institutions could be established in China, even expanding. It is more important to supervise the foreign banks because more and more foreign institutions were founded in China than before, especially after accession to WTO. Based on the information above, this paper summarizes useful information, by comparing the methods of supervision on foreign banks in different countries. Moreover, effective suggestions for the supervision policy on foreign banks are proposed by the analyzing status quo and the problems in China.In detail, firstly, this paper summarizes the supervision theories on foreign banks in different articles. Secondly, the overview of supervision in developed countries and emerging countries is introduced from three aspects, which are the supervision on market access, market operation and market withdrawal, to make a concluding by international comparisons. Thirdly, this paper describes the development of foreign banks in China. The accelerating expanding speed and the enlarging operating range of foreign banks pushed China to emphasize the supervision on them and find a balance between encouragement and restriction. Then, the main urgent problems in supervision on foreign banks are raised by analyzing the status quo in China from the supervision on market access, market operation and market withdrawal separately. At last, three useful policy recommendations are offered. For improvement, it is necessary to focus on the supervision of market access conditions and foreign banks access. Enacting laws and regulations, enhancing internal control and establishing a stable supervision system with powerful risk control and regularity rationality should be put into effect. Reasonable deposit insurance policy and the lender of last resort system are needed to improve the market withdrawal mechanism. It's make sense to analysis the contradictions on supervision over foreign banks in China, strengthen and improve macro-control, improve the scientific and effective of control, and build the foreign bank supervision system.