Construction Of Legal Supervision System In Offshore Banking Market Of CPFTZ

Offshore financial whose center is offshore banking is known as a trulyinternational finance. To promote the development of this form of finance, legalsupervision system needs to be built and improved. CPFTZ needs to establish acomprehensive offshore banking market which should be the combination of strictlyand limited separated supervision model and it requires to further promote theconstruction of legal supervision system.The legal relations of Offshore banking supervision involve many countries.The country where the market locates at has the rights to supervise this market. Thelegal principles of supervision are the Principle of National Economic Sovereignty,National Jurisdiction Theory, Banking Business Instability Theory and BimodalTheory. Every country has clear supervision system which includes three parts whichare permission supervision, business operating supervision and exit supervision in thisarea. The legal supervision of China’s domestic offshore banking market exists thefollowing questions which are the unreasonable two-way penetrative market mode,lack of a mandatory exit system, lack of specific foreign banking supervision, theconflict of relevant provisions and so on. These problems can not only affect theestablishment and development of offshore banking market in CPFTZ, but alsothreaten the security and stability of the financial market. CPFTZ also belongs to thescope of the civil law domain and it should follow the traditional legal supervisiondocuments. The construction of supervision system should change the traditionalconcept of supervisory compliance into the main supervisory compliance with theassistant risk supervision. Insisting on the principle which is Front line release,Second safe and efficient supervision, CPFTZ need to settle problems in theconsideration of its characteristics. Therefore we could make the followingsupervision proposals which are one-way inward penetrative separation ofsupervisory model, to establish a monitoring system to force quit, to establish a crisisearly warning mechanism, to include the foreign banks in targeted supervision systemand so on.CPFTZ exists conditions to start the offshore RMB business. It is not onlynecessary to establish an offshore RMB market in the following main trend, but alsoan important step to promote the internationalization of RMB. How to realize safe and effective supervision in offshore RMB market become a new inevitable issue. In viewof the particularity of offshore RMB business, it requires to separate the supervisionof offshore RMB and foreign currency. It should follow the proposals which areadoption of strict separation type supervisory mode, the creation of deposit insurancesystem, the implementation of the license system and other aspects to make perfect.All in all, these proposals aim to provide an institutional guarantee for theestablishment and development of this market under the maximizing control of risk.