China's New Exploration Of The Supervision Of Foreign Banks

Five-year transition period that China had been a WTO member ended on Dec. 11, 2006, at the same day, the locations'and customers'limitations that foreign banks operated RMB services in China were cancelled. Within the framework of commitments and prudent supervision and regulation, China grants foreign banks national treatment. The Committee of Supervision and Regulation of China Banking published PRC'Regulations of Supervision of Foreign Banks'on Nov.11, 2006, in which legal issues of guiding foreign banks to be locally incorporated were the focus.Guiding the foreign banks to be locally incorporated is in the form of law to encourage foreign banks to choose their business forms on their own according to their strategies in China and transfer their branches in China into locally-incorporated banks at any time. The locally-incorporated banks may enjoy a full national treatment, offer a full range of RMB services and will receive the same supervision and regulation standard as Chinese banks. The aim of guiding foreign banks to be locally incorporated is to facilitate the full development of foreign banks, protect the interests and benefits of Chinese depositors and follow the trend of international banking development.As a new exploration of supervising and regulating foreign banks under the new situation, guiding foreign banks to be locally incorporated not only performs the commitments of China'Entry into WTO, but follows the rule of prudent supervision and regulation and international practices, however, the legislation level of guiding foreign banks to be locally incorporated is not high, what's more, it is against the direction of international finance liberalization and internationally supervising the market entry of foreign banks and makes no good to the development of China banking. This thesis gets the result that the legislation of guiding foreign banks to be locally incorporated is a better means to supervise foreign banks under present situation by analyzing the ways of different countries supervising the market entry of foreign banks, but it is not the best from a far sight. The legislation of guiding foreign banks to be locally incorporated still has some shortcomings. This thesis puts forward some concrete suggestions on how to better the legislation of guiding foreign banks to be locally incorporated in consideration of the situation that China has fully opened its banking to foreign banks.