China's new banking commission officially started functioning
Monday, setting out on a mission to reform the country's banks
ridden with bad loans and to stave off banking risks.
The timing of the official launch of the China Banking Regulatory
Commission (CBRC) was largely expected, but it was still unclear
how differently the new commission would approach its designated
role of regulating and supervising China's banks and other
deposit-taking financial institutions.
A
plenary session of the National People's Congress last month passed
the proposal to set up a separate organization to take over the
central (PBOC)'s work of supervising banks.
A
further Congress decision last week gave that regulatory role to
the new commission, as legislators work to revise China's Central
Bank Law, which stipulates that the central bank is to regulate
banks.
Wei Jianing, a senior researcher with the State Council's
Development Research Center, said: "We expect the CBRC to do its
job of preventing and dissolving banking risks increasingly by
means of reinforcing bank supervision, brushing up its level of
regulatory expertise, and fostering a greater pool of first-class
regulatory personnel.''
The paramount goal of the landmark reform is to improve the
efficiency of bank supervision and the central bank's monetary
policy making. Analysts said the central bank's playing of the two
roles had eroded the efficiency of both.
The commission Monday vowed to implement long-term planning and
ensure "some innovation'' in the areas of regulatory methodology,
systems and technologies to modernize financial supervision and
make it more professional.
The new body also pledged to establish co-ordination mechanisms
with the insurance and securities regulatory authorities to ensure
China's financial security.
The 15-department banking commission said its major
responsibilities include "formulating supervisory rules and
regulations for banking institutions, (and) authorizing the
establishment, changes, termination, branching out and business
scope of banking institutions.''
It
is also responsible for making proposals on the resolution of
problem deposit-taking institutions and "performing other
responsibilities delegated by the State Council.''
Regional branches of the commission are being set up, it said.
Analysts said it could cost tens of billions of yuan (billions of
US dollars) to set up branches for the ministerial-level commission
in some 320 cities where the central bank has a prefectural office,
due to expenditure on office buildings, personnel and
equipment.
(China Daily April 29, 2003)