Research On Legal Issues Of Bank Regulation Under Basel Ⅲ Framework In China

The international financial integration and liberalization are the two most spectaculartrends in the financial realm, bringing unprecedented opportunities for the development of thebanking industry. The financial liberalization has loosened restrictions on competition;meanwhile integration has broadened operating space for banks, enabling them to providevarious cross-border services. However, these two trends have devastated the stability of thefinancial system, increased risks for transnational banks, and brought to bank monitoringsystems shocks that have hitherto been unknown. Therefore, the Basel Framework wasestablished to unify monitoring standards, and to coordinate regulating authorities amongdifferent countries.Since the framework was established in1975, its authenticity in international finance hasbeen gradually recognized, with its principles and standards being turned into tangibledomestic laws and regional regulations to direct practice. Upon the foundation of the BaselAccord in1988and the Basel Accord II in2004, the Basel committee has released the BaselAccord Ⅲ, putting more rigid requirements on statutory capital, setting capital conservationbuffer ratio, introducing leverage ratio regulation standards, and attempting to establish aninternational regulation index on liquidity. The promulgation of Basel Ⅲ helps authoritiesaround the world to improve abilities on banking risk regulation, and impels banks tostrengthen risk management and internal governance.Though non-constraining, the Basel Accord is widely accepted and recognized, and itscontents are consulted and practiced around the world. Because of differences in economicenvironments and monitoring modes among nations, especially the gap between the less andthe more developed countries on monitoring ideas, abilities and modes, under the backdrop ofunification of international banking regulation, it has become the most urgent issue for theless developed countries to gradually introduce Basel Ⅲ based on their own nationalconditions.China is a developing country, and with its capital market growing more and moreinterdependent with the international market, it has to learn the more advanced monitoring ideas and modes in order to grasp the development opportunities in the trend of integrationand liberalization. The country’s monitoring ideas are not up-to-date, and relevant laws andregulations are defective, so China has to learn from Basel Ⅲ and other countries. Theexperience will be beneficial to the perfection of laws on banking regulation.This article begins with an introduction to the history of the Basel Capital Accord, andthrough comparison between Basel Ⅲ and Basel II, introduces the improvement of Basel Ⅲon regulating standards and methods. Afterwards, the article attempts to analyze the potentialinfluence of Basel Ⅲ under the background of global financial depression. The article willthen point out the deficiencies in China’s bank regulation system. Lastly, the article willprovide suggestions to establish a system that meets the international trend. The authorconsiders that the combination of a more sound external monitoring and internal managementis needed for present Chinese banking industry. Meanwhile, enclosure system should beimproved, and monitoring should be strengthened. Moreover, blanks in relevant laws shouldbe filled, so that the laws can better support banking monitoring.