Innovation Of Chinese Commercial Bank Capital Replenishment Tools

In1988, the Basel Committee on Banking Supervision (BCBS) issued the BaselCapital Accord in order to improve the safety and stability of global financial systemwith minimum capital adequacy standard. In2004, the International Committee ofBasel, after the first revision protocol, launched the "the second edition of Baselprotocol”(referred to as the "Basel II"). This agreement put forward the "three pillars"point of view, which includes: first, the minimum capital requirements; second,supervision and inspection of regulators; third, market discipline. The aim is tointegrate the operating risk into capital management and reach the level of riskmanagement. Developed with the financial revolution for more than20years, theBasel Accord ran into the times of Basel III, in which the capital requirement hasbecome more detail. The new Basel Accord now includes not only more strict basiccapital adequacy, but also the minimum leverage ratio and liquidity requirement. As amember of BCBS, the CBRC (China Banking Regulatory Commission) published ournew Capital supervision requirement after the publishment of Basel Ⅲ, which iscalled the "Basel III of China". The name of Chinese new requirement is"Commercial Bank Capital Management Method". It is the newest guide and verymuch worth researching to find what kind of influence it will bring to our commercialbanks.After the outbreak of financial crisis, China began to implement an activemonetary policy. During this period, commercial banks became the major role ofreleasing liquidity in the market. But such a large credit expansion led the decline onthe quality and quantity of core capital of domestic banks. A low level of core capitalbrought challenges to listed banks and could threaten their ability of sustainingprofitability and managing risks. Furthermore, I concluded that the document willmake the commercial bank face the financing pressure, guide them to switch theirtraditional business pattern, and lead them to build a more full-scaled riskmanagement system.