|China endeavors to build legal framework for banking supervision (11/07/03)|
The China Banking Regulatory Commission (CBRC) is reviewing over 2,000 existing banking rules and regulations to put in place a legal framework for the financial sector.
Liu Mingkang, chairman of the CBRC, told the on-going World Economic Development Declaration Conference that a well-designed legal framework is a precondition for effective banking supervision and a sound credit environment.
Liu noted that the draft Law on Banking Supervision and Regulation passed a second reading this October at the Standing Committee of the National People's Congress, China's law-making body.
To improve risk control of banking sector, the CBRC is also urging all banks to adopt the five-category loan classification system, improve their analysis of cash flow, and narrow the gap between their accounting rules and the international standards.
Liu admitted that there is still a gap between the accounting rules for the Chinese enterprises, including banks, and the international accounting standards.
"We hope that through these efforts the prudent accounting standards will be finally adopted by the entire banking sector in China," said Liu.
Transparency of banking operation is also listed as a priority for the CBRC, said Liu, noting that Chinese commercial banks, including the state-owned ones, are making considerable progress in information disclosure and subjecting their activities to market discipline.