The Development Of Foreign Banks, The Role Of Supervision

After a long absence, foreign banks are coming back to China as the country becomes increasingly open and its economic and financial systems become more liberalized. The entry of foreign banks will bring significant impacts on Chinas economic and financial development in the future. A most notable impact will be their catalyst role in facilitating the rationalization of the country's banking and financial regulation system. In addition, a greater role played by foreign banks will necessarily pose serious challenges to China's macroeconomic stability management in the long run.Foreign banks are coming to China. Since China became a member of the World Trade Organization (WTO) in 2001, a number of foreign-banking institutions have announced their intent to enter the Chinese market. Several foreign banks bought stakes in Chinese banks. The wave of foreign banks entering China today may have vast and profound implications for the future of Chinese economy and finance. Today, foreign banks in China only own a tiny proportion of it (2 percent around). Yet, foreign banks stand out as a serious competitor to domestic Chinese banks and the new challengers to Chinas existing banking system, which has been characterized by state ownership. Given the fact that many foreign banks are currently seeking a union with Chinese banks, which are also flirting with foreign suitors, it would be interesting to know what impact foreign banks would bring to China's banking in the future.Regarding the role of foreign banks in transforming the Chinese banking system, it has been noted that as new, completely independent players, foreign banks would undoubtedly provide a good example for Chinese banks to seek development in a similar way. Success stories about foreign banks in China and elsewhere will also inspire Chinese entrepreneurs to become more innovative in China's banking service industry. Foreign stake holdings in Chinese banks - minority holdings mainly by foreign banks will certainly bring fresh ideas and contacts for Chinese bankers, andalso possibly instill a little more distance from their previously dominating owner -the State.To date, the supervision of the foreign banks have shown great changes which are including of the legislation and amending of the correlative regulation and law accounting to China's WTO promise, the establishment of new supervisor institute and the fresh supervision idea .The supervision work has made a great achievement, For all, there is still a long way to go for the Chinese Banking Supervision. At last in the thesis, the suggestions have been given in four respects.This thesis will first of all definite what is the 'Foreign Bank' and provide a brief picture on the foreign banks' entry into China and development and why they does so. In Section II the impacts foreign bank brings into the China and their businesses will be analyzed with regard to their integration with Chinas economy and finance on the basic of thermo summarize. Section III will discuss the opening and reforming of the Chinese banking system and point out that the foreign banks in China will play the key role in this situation, further more as suggested, they would likely to be the best choice as the strategic partners to the local banks. Section IV will take the challenges foreign banks bring to the government's supervision into account and give the suggestion in corresponsive.