China Banking Regulatory Research

The formal establishment of China Banking Regulatory Commission (CBRC) on April 28, 2004 remarks the end of an old era of banking regulatory and the beginning of a new one. We are facing in the new circumstance an imperative and important subject, i.e., how to perfect the system and improve the efficiency of banking regulatory, how to furthest protect depositors' benefit and how to maintain the stabilization of banking industry.In this dissertation, I will proceed with the basic theory on financial supervision, including banking regulatory, and discuss the imperative and practicality of banking regulatory. After analyzing the theories of public interest, financial frangibility, controlled supply and demand and rent seeking. I notify that, despite of the different angle of views, the forth-mentioned theories all prefer supervision on banking industry to the idea of laissez-faire. Based on the analyze, I summarize the essential issues in the development of Chinese banking industry and the fierce competition with foreign banks, and point out the practical importance and of banking regulatory in ChinaDespite different features, the cores of banking regulatory in market economy countries like United Kingdom, United States and developing market economic countries and districts like Korea, Singapore, Hong Kong are similar. For instance, the regulatory target, system, methods, contents, co-operation and the deposit insurance system are similar. This shows both the internationally new tendency and the general rules in banking regulatory, and deserves the thorough study and reference of Chinese banking supervisor.Restricted by Chinese political, economical and financial mechanism, the history of Chinese banking regulatory is rather short. Looking back to this history, we can clearly see their close relationship. In planned economy mechanism, the bank industry had no independence and had become the vassal of national plan and finance organs, and hence few banking regulatory is needed. Along with the reform and outward open of China started in 1978, China's financial mechanism has changed accordingly. In the financial sector, the deepening reform and more independence of banking industry posed more demand on regulatory. After the establishment the People's Bank of China (PBC)'s role as the central bank, the banking regulatory functions have been enhanced. PBOC had long been acting as a complex supervisor of three financial industries including banking, securities and insurance until the establishment of CSRC and CIRC. With the establishment of the CBRC in April 2004, China's banking regulatory has stepped into the specialized track. However, this reform cannot write off all the complicated and formidable questions coming into being long ago.The establishment of CBRC and especially the promulgation of the Law of thePeople's Republic of China on Banking Regulation and Supervision have narrowed the gap between China's banking regulatory and those of advanced countries, and have set up a sound platform for the improvement of China's banking regulatory. In order to radically improve the banking regulatory, the supervisor shall refresh the idea, make clear the focus of supervision, adjust the method, set up the mechanism of supervision and cooperation, set up the mechanism of banking industry protection, speed up the regulation procedures and improve supervision ability. Only by doing these, China's banking regulatory can grow up healthy continually, the supervisor can actually be protector for depositors' benefit and the stabilizer of banking industry, and the banking industry can fully play the key-role function in national economy.