Bank regulation and supervision of China

2. The problems existed in China. 

According to the Laws of China, we can get that before 1995, the banking regulation system was much inferior to most of the developed countries. However in 1995, the Law of the People’s Bank of China and the Law of Commercial Banks established that the People’s Bank of China is best place to regulate. After that, the People’s Bank of China established related rules to regulate the banking system. Although there are enough Laws and Rules to regulate and supervise the banking system, but there still have some problems existed in China.

Laws and regulation for regulation system is incompletely.

In recent years, Li Jinhua, Auditor-General, repeatedly proposed in the annual auditing report on NPC Standing Committee that there existed the illegal behavior in the financial area. In China, there are 15 laws of finance, and there are more than 40 financial regulations right now, also the people’s Bank of China has estimated more than 1000 rules already. But the legally binding of these laws and regulation is not too big to regulate and supervise for the banking industries well. So the legal system is incompletely yet, which could hinder the legalization of the bank Supervision.

The bank regulation and supervision are not sustaining.

In China, the work of regulation and supervision are not sustaining, as it has problems of paucity of checking, which means, in some status, the spot checking has the problem of continuity lacking, a huge amount spot checking are arranged temporarily. And the result of checking is not always proper. Repetitive inspection can be seen everywhere. Due to the efficiency of regulation and supervision is not too high, solving the present problem become to the challenge.

The personal professional skill of regulator is not quiet in a high level.

The regulator should be the professional employees. In China, It’s human to regulate, to find and evaluate the risk of bank, so the error could happen. It’s necessary to improve the ability of regulator. In the foreign country, they are focus on the training of the supervision staff, and the training is very strict. For example, they should learn the laws, computer technique, and accounting knowledge and so on. But now in China, the regulator is not quite rational, and professional.

The internal management of Bank is confusedly.

In 2007, China Banking Regulatory Commission reported that strengthening the regulation of bank’s internal system tends to be a very important topic. Few years before 2007, internal of banks in Heilongjiang Province frequently occurred the serious financial cases. Because sometimes the regulation was too weak, which make the internal staff can use simple tool to steal hundreds of millions of property. So experts pointed that the illegal financial acts of banks happened frequently which indicate the banking sector itself have the seriously flaw. To perfect the internal banking system becomes a serious issue.

For suffering these problems, the solution will be discussed in the following part.