International Banking Regulation and Supervision after the Crisis : Implications for China

Against the background of the reform wave of banking regulation and supervision over the world, we review the development path of banking regulation and supervision in China to understand how and in which direction the regulatory and supervisory framework in China evolved and how regulation and supervision guarded China's banking sector in the financial crisis. We further conduct comparative studies on regulatory issues in China, France, Germany, the UK and the USA to draw implications for the development in China. We especially discuss regulatory goals, principles, structure, scope, macro-prudential policy, systemic risk control and activities restriction in the above countries. Our assessment identifies that Chinese supervisors took great effort in the last thirty years to establish and upgrade the regulatory and supervisory framework in China to international standard. The current already very strict regulation in capital, liquidity and business scope even above international levels makes the implementation of even Basel III in China no bigger challenge than in Western countries. In international comparison, regulation in China is characterized with high stability orientation instead of the overemphasis on market competition and efficiency, mainly based on rules with increasing risk orientation, segregation both in activities restriction and regulatory structure, strong macro-prudential oversight and frequent rules updating. However, the increased market and product variety and the surge of cross-sectoral services call for more sophistication and consolidation in regulation and supervision