Analysis And Comment On The Legal And Regulatory Framework Of China's Banking Industry

The banking industry plays an important role in a country's economic development. China's banking industry has experienced fast reform and growth. Meanwhile, the legal and regulatory framework of China's banking industry has witnessed the change from the planned economy to market economy. Despite the continuous improvement, the legal and regulatory framework of China's banking industry is still far from perfection and requires great efforts to achieve maturity.Based on the analysis of the legal and regulatory framework of China's banking industry, the author deems that the banking regulatory framework should be an organic system, which is designed through scientific and scrupulous procedures. The regulatory bodies should well define their supervisory ideology and unify supervisory policies. The regulations should well define the non-compliance responsibility of the banks and at the same time grant necessary flexibility to the banks to ensure their innovation and vitality. The regulatory resources should be utilised adequately and the cost of regulation well considered to improve efficiency. The regulatory transparency needs to be enhanced. The primary objective of supervision should be to administer risk and effectively execute the administration of fair market competition.The article is divided into four parts, details as below:The first part: concept and composition of the regulatory framework; comment on the existing banking regulatory framework, including relevant laws, regulations and circularsPart two: illustration on banking regulatory framework in consideration of the status quo and expectation of the development of the country's banking industry; including analysis on the supervisory ideology, scope and methodology of the main regulatory bodies; analysis on the application of the rules in terms of new business development; analysis on the relationship between supervision and compliance; and analysis on the cost and effectiveness of the regulations. Part three: reference is made to overseas banking regulatory framework and infrastructure construction, including the multi-supervisory mode of the US, the effective supervisory ideology of Canadian's central bank, the banking supervision and the role of banking association in Hong Kong, as well as the compliance system in foreign banks.Part four: recommendation is raised on how to develop from existing framework to the ideal one, including recommendations on clear definition of the supervisory functions and coordination of different supervisory objectives; recommendations on setting up balanced supervisory ideology; recommendations on effective supervisory methodology; regulatory support on new business development; improvement of the compliance infrastructure and foster of compliance culture; enhance the role of banking association; etc.