Chinese Foreign Bank Supervision System

The five-year transitional period after China's entry into WTO has expired. Tofulfill her promise of opening up the financial service market, China has canceledall the restrictions on the scope of business and regional range for foreign-fundedbanks. Although The State Council had enacted the newly revised "Regulations ofthe People's Republic of China Governing Foreign-Funded Banks" as our mainlegal document on regulating foreign-funded banks, the flaw is unavoidable. Andwe must improve the supervisory legal system of foreign-funded banks in China todissolve the risk arising by the entry of foreign-funded banks. This thesis focusingon how to complete supervisory legal system of foreign-funded banks divided intosix parts.The first part of this article delimits the scope of foreign-funded banks anddefines the concept of supervising foreign-funded banks firstly, and then gives abrief introduction to the core spirit of《General Agreement on Trade in service》(GATS),《The Global Finance Service Agreement》and relevant regulationsconcerning the banking market in WTO system while giving the outline of theagreement formulating by the Basle Committee, which is the most importantinstitution that controls the activity of all the banks. After sketching out the currentlegislations on supervising foreign-funded banks, it points out that we shouldpromote the legislations on the supervisory legal system of foreign-funded banksaccording to the requirement of WTO principles and the standard set by the BasleCommittee.The second part mainly analyzes on the supervision and regulation system offoreign-funded banks' market access. After giving a brief review of four objectivesin supervising foreign-funded banks' market access, it points out the flaws of ourlaws and regulations. Then it gives some proposals to improve our supervision andregulation system of foreign banks' market access.The third part discusses the supervisory legal system of foreign-fundedbanks' holding the share of domestic bank. Upon analyzing the current legislationon this issue, it suggests enacting the specialized "Regulations for the Administration of the Shareholding in Chinese-funded banks by foreign-fundedbanks" and perfecting related laws.The fourth part focuses on supervision and regulation of foreign-fundedbanks' management of renminbi business. It indicates that the supervision systemwill meet challenge as a result of completely opening up the market toforeign-funded banks. And then it lists measures in dealing with these difficulties.The fifth part introduces the objectives and contents of a sound and effectiveinternal control system of banks on the basis of analyzing the relevant documentsof Basle Committee. Moreover, it put forward two aspects of enhancing thesupervision and regulation of foreign-funded banks' internal control system: one isto urge the banks to accelerate the estabfishment of internal control system; anotheris to improve the supervision on implement of the system.The sixth part is the key part of this thesis. In this part, the author lay out hisview on perfecting our country's legal system of supervising foreign-funded banks.It concludes two aspects. On completing the legislation we ought to stick to someguiding principles, and then we can take steps to formulate "the Supervisory Lawof Foreign-Funded Banks" by National People's Congress. On establishing thesupervising system, it advises that a comprehensive supervising system led by theCBRC (China Banking Regulatory Commission) should be build.