Legal Thoughts On The Bank Clearing Operations In China

Being essential part of daily banking operations, clearing transactions is one oftraditional banking business. With China's opening up to the outside world, theon-going financial innovations and the improvements in financial informationtechnology, the scope of clearing transactions have been enlarged. Contemporaryclearing transactions includes a wide area of financial services, research anddevelopment of clearing system, internal control and settlement of foreign exchangedealings, which go beyond traditional clearing transactions. At the same time, theclearing transactions have become a kind of direct banking services while maintainingits supporting role of banking operations. In the recent years, on the other hand, manykey unlawful cases have been found in domestic banking industry, many of which haveclose relations with banks' clearing transactions, the risk control of clearing transactionsfaces a great challenge. However, the research about the legal relationship betweenparticipants in clearing transactions and regulatory supervisions of banks' clearingtransactions is not enough, so it has been called to solve these problems through legalthinking on the bases of reorientating banks' clearing transactions business, clearlyrefining particular clearing transactions service and analyzing the issues existed in thepractice of clearing transactions.The preface of this paper shows the author's thoughts.In the first part of the paper, the writer starts with elucidating the concept ofclearing, picks out and reduces the legal relations related to clearing transactions. Withthe features of complexity, speciality and practice , there is a wide gap between the fieldof finance and the field of law, so it is necessary to introduce clearing transactions fromeconomic and historical points of view. The writer reiterates the legal relations inclearing transactions in legal terms as follows: the regulating and being regulatedrelations between commercial banks and the authorities for the banking industry inchina;the governing and being governed relations between internal branches andsections of a bank;the agential relations between individual bank and other financialinstitutions;and the bill relations in inter-bank clearing. In the second part of the paper,the writer further illuminates the legal relations mentioned above from the followingaspects: the framework of clearing organizations, clearing system, local bills clearing,foreign exchange clearing, agential clearing and the influence of American 21st CenturyBills Action on the development of our clearing transactions. The third part of the papercovers systemic presentation of the banking practice and related legislations of foreigncountries in the field of clearing transactions. In the last part of the paper, the writeremphasizes how to consummate standing laws or regulations related to clearingtransactions and suggests taking the following measures to insure the steadydevelopment of our clearing transactions: To establish Clearing Bank of China;Tooptimize local currency and foreign exchange clearing system;To unify the laws andregulations regulating local bills clearing business;To improve the legal environment ofagential clearing business in banks;To take effective actions to deal with American 21stCentury Bills Action.