A Study On The Supervision Of Foreign Banks After China's Entrance Into WTO

This text mainly studies main problems that still existent at present and solutions to them in supervision of foreign banks along with China's entry into the WTO.China joined WTO at the end of 2001, the authority of supervision experiences unprecedented difficulties and problems: (1) The market of banks will open in an all-round way after 2006, the foreign banks will obtain national treatment and develop with higher speed , competition among banks aggravates , increasing of systemic risks may make financial system of China unstable; (2) Basel Accord is accepted extensively in the world, the authority need supervises foreign banks according to Basel Accord. And the ability of supervision is poor, a lot of great defects exist, even a lot of disparity or deviation to Basel Accord, the authority has taken many effective measures already, but study of the problems existent at present and looking for the answer is still necessary for maintaining financial system stability and the foreign banks'playing the positive role in the economic development of China.At first, this text explains theoretical foundation, special causes of supervision of the foreign banks and four kinds of basic types of regulation and supervision of the foreign banks. As to theoretical foundation for supervision of multinational banks, there are two main theories. The one is the theory of finance market failure, which is generated by negative externality and asymmetric information, etc. The other one is the Financial Fragility theory, such as Financial Instability Hypothesis by Hyman Minshy, Bank Run Model by Diamond-Dybvig.Furthermore, the realistic background for the supervision of multinational banks is its internationalized operations accompanied by more sophisticated risks.Second, this text explains four commitments of Chinese Government to WTO in financial market, thus analyzes the development of foreign banks after China's entrance into the WTO and its influences to financial system stability of China, and describes four main principles of Basel Accord, for understanding the requirements of Basel Accord to the authorities in supervision of the foreign banks.Third, the paper discusses and analyzes problems exist at present: problems which the authority have taken measures to tackle on; other problems even exist at present.At last, the paper gives some solutions to the problems above.