The Current State of the Financial Sector and the Regulatory Framework in Asian Economiesâ€”The Case of the Peopleâ€™s Republic of China
Abstractï»¿ï»¿Reform of financial regulation is a priority on the international agenda. At the call of the Group of Twenty Finance Ministers and Central Bank Governors (G-20), a number of new international standards have been issued, most notably Basel III. As a member of the G-20, the Financial Stability Board (FSB), and the Basel Committee on Banking Supervision, the Peopleâ€™s Republic of China (PRC) is now on a faster track in adopting international standards. However, the key issue for the PRCâ€”as well as many other emerging marketsâ€”is to how to keep focused on the domestic policy agenda while adopting the new global standards. Fortunately, the PRCâ€™s financial system has proved resilient to the recent financial crisis. As a result, banks in the PRC find it quite easy to meet the new Basel III capital and liquidity standards. Basel III is only part of an effective regulatory framework. While phasing in Basel III, the PRC needs other prudential tools such as a new provision ratio, in addition to the provision coverage ratio. Activity restriction will be another effective tool with the potential to prevent banks from becoming too complicated for bankers to manage and for the regulator to supervise. As we work hard to improve the effectiveness of the regulatory system at both the global and national level, we should remind ourselves of the importance of keeping the balance between enhanced regulation and promoting financial innovationâ€”without the pendulum swinging too far.
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Finance Working Papers with number 23226.
Date of creation: Sep 2011
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financial regulation; China; financial sector; banking supervision; regulatory framework;
Find related papers by JEL classification:
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-14 (All new papers)
- NEP-MAC-2012-03-14 (Macroeconomics)
- NEP-RMG-2012-03-14 (Risk Management)
- NEP-TRA-2012-03-14 (Transition Economics)
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