The Analysis On China's Financial Supervision System

The first part theoretically intruduces the financial supervision and financial system. National Financial Supervision Institutions supervise and manage the financial industry and the involved in order to ensure the legal operation of the financial industry, fair competition, effective emonetary policies and found a nice environment for the social economy. Finance, which maintains close links with economy, is core of modern economy. So it is a high-risk industry. As finance is important in the modern economy and the financial industry is a public and social industry, it will lead to a serial actions when it cannot pay to the depositors. The financial institutions influences the steadily supply of the money and the operation of the economy. The internal characters asks for a powerful and standard financial supervision institution responsible for the supervision and the management of the financial market and the resolve of the problems caused by the financial market shortcomings. The frame of the modern financial supervision system includes the subject, the object, the aim and the methods of the financial supervision. The financial supervision system different from others for the differences in the history, political and economic systems, law and national characters. China should change and improve the present supervision system which has contradicted with the new trend in finance. The second part discusses the financial supervision system of China and the challenges it faces. The reformation of China's financial supervision combined with the reformation of the financial industry has four stages. It was a primary stage from 1948 to 1984. It was the exploring stage since 1984 to 1994; From 1994 to 1995 was the third stage when specialized laws came out; And since 1995 the reform stepped into a further stage. After a range of reformation, the present respective operation-supervision system takes obvious effect in maintaining the steadiness of the finance, predicting the financial risks and smoothing the economic development. There're still many problems in the present financial supervision system when it faces the development of itself and joined WTO such as the supervision methods are simple, the modes lags behind, the scope is narrow. At the same time, the absence of the supervisor causes the absence of management and other contradiction. And the inner control system and the self-control system should be strengthened; the legal frame needs improvement; and criminal cost is low which implies the week outer supervision. The last two parts discusses and contrasts the financial supervision systems of U.K, Japan, Korea etc and the recent changes in them. Combined with the new trend of the international financial supervision system and problems of the China's financial supervision system, the paper discusses the plan and the suggestion to the China's financial supervision system. Now international financial supervision aims to ensure the safety and the effectiveness of the financial industry. As the structure of the financial supervision develops comprehensively and untidily and the supervision scope is larger and larger, the supervision patterns develop and the international cooperation is tightened. Since China joined WTO, the internal financial market has kept close relationship with the international financial market. Considering of the financial safety and steadiness, China should emphasize the importance of reformation and take steps to change and strengthen the financial supervision. Set about effective information sharing and coordination system. Promote supervision methods and enlarge the supervision content and circle. Found the good system of inside controlling and social supervision, which the financial supervision institutions mainly perform. Strengthen financial legal construction and improve financial supervision law system. Timely disclose the information and strengthen the market discipline and outer supervision. Upgrade the ability of the banking management and the standard of information and technology, reform the management system, improve the ability of managing the banks through the technological methods. Strengthen the cooperation and communication with the internationalfinancial supervision institutions. As the development of the financially controlled companies, China's financial industry steps on the road which banks not supply the normal services but other services such as insurance. It is the best choice to run the banks comprehensively and supervise them respectively. The managers should learn from the American experience to construct a double financial supervision system based on respective laws. That is a institution managing three or four commissions. National supervision institution should work as the most powerful management institution instead of the People's Bank of China. At the same time the banking supervision task should be separated from PBC and China Banking Regulatory Commission is responsible for the financial supervision. PBC no longer work as the most powerful management institution but to work to make monetary polices. And China Trust and Investment Regulatory Commision can also be separated from PBC. All the commissions can work respectively under the management of the National Financial Supervision Institution. They specialize in the management of the financial institutions and their sub-organizations. The National Financial Supervision Institution has the right to council the responsibilities and contradicts among the specialized supervision institutions, thus it can resolve the problems caused by the co-existence of respective operation and comprehensive operation.