PEOPLE S BANK OF CHINA

Transcription

1 Introduction to the People s Bank of China (PBC) The People s Bank of China (PBC) was established on 1 December 1948 based on the consolidation of the former Huabei Bank, Beihai Bank and Xibei Farmer Bank. In September 1983, the State Council decided to have the PBC function as a central bank. The Law of the People's Republic of China on the People's Bank of China passed by the Third Plenum of the Eighth National People's Congress on 18 March 1995 legally confirmed the PBC's central bank status. In March 2003, the First Plenum of the Tenth National People's Congress approved the Decision on Reform of the Organizational Structure of the State Council, separating the supervisory responsibilities of the PBC for the banking institutions, asset management companies, trust and investment companies and other depository financial institutions. Instead, the China Banking Regulatory Commission was established to supervise the financial industry. On 27 December 2003, the Standing Committee of the Tenth National People's Congress approved at its Sixth Meeting the amendment to the Law of the People's Republic of China on the People's Bank of China, which has strengthened the role of the PBC in the making and implementation of monetary policy, in safeguarding the overall financial stability and in the provision of financial services. The Function of PBC Under the guidance of the State Council, the PBC formulates and implements monetary policy, prevents and resolves financial risks, and safeguards financial stability. The Law of the People's Republic of China on the People's Bank of China provides that the PBC performs the following major functions: issuing and enforcing relevant orders and regulations; formulating and implementing monetary policy; issuing Renminbi and administering its circulation; regulating inter-bank lending market and inter-bank bond market; administering foreign exchange and regulating inter-bank foreign exchange market; regulating gold market; holding and managing official foreign exchange and gold reserves; managing the State treasury; maintaining normal operation of the payment and settlement system; guiding and organizing the anti-money laundering work of the financial sector and monitoring relevant fund flows; conducting financial statistics, surveys, analysis and forecasts; participating in international financial activities in the capacity of the central bank; performing other functions specified by the State Council. The Independence of PBC The PBC performs its functions and carries out business operations independently according to laws and free from intervention by local governments, government departments at various levels, public organizations or any individuals

2 Institutional Arrangement of PBC The PBC needs to report to the State Council its decisions concerning the annual money supply, interest rates, exchange rates and other important issues specified by the State Council for approval before they are put into effect. The PBC is also obliged to submit work report to the Standing Committee of the National People's Congress on the conduct of monetary policy and the performance of the financial industry. All capital of the PBC is invested and owned by the State. Management and Organizational Structure of PBC The top management of the PBC is composed of the governor and a certain number of deputy governors. The governor of the PBC is appointed into or removed from office by the President of the People's Republic of China. The candidate for the governor of the PBC is nominated by the Premier of the State Council and approved by the National People's Congress. When the National People's Congress is in adjournment, the Standing Committee of the National People's Congress sanctions the candidacy for the governor of the PBC. The deputy governors of the PBC are appointed into or removed from office by the Premier of the State Council. The PBC adopts a governor responsibility system under which the governor supervises the overall work of the PBC while the deputy governors provide assistance to the governor to fulfill his or her responsibility. The head office of the PBC is located in Beijing, the nation's capital and consists of 18 functional departments (bureaus). MONETARY POLICY IMPLEMENTATION Committee The responsibilities, composition and working procedures of monetary policy committee, is prescribed by the State Council and filed to the Standing Committee of the National People's Congress. The Monetary Policy Committee plays an important role in macroeconomic management and in the making and adjustment of monetary policy. The Committee is a consultative body for the making of monetary policy by the PBC, whose responsibility is to advise on the formulation and adjustment of monetary policy and policy targets for a certain period, application of monetary policy instrument, major monetary policy measures and the coordination between monetary policy and other macroeconomic policies. The Committee plays its advisory role on the basis of comprehensive research on macroeconomic situations and the macro targets set by the government. 16

3 Objective of the Instruments The Composition of Committee The objective of the monetary policy is to maintain the stability of the value of the currency and thereby promote economic growth. The monetary policy instruments applied by the PBC include reserve requirement ratio, central bank base interest rate, rediscounting, central bank lending, open market operation and other policy instruments specified by the State Council. The PBC's Governor and two Deputy Governors, a Deputy Secretary-General of the State Council, a Vice Minister of the State Development and Reform Commission, a Vice Finance Minister, the Administrator of the State Administration of Foreign Exchange, the Chairman of China Banking Regulatory Commission(CBRC), the Chairman of China Securities Regulatory Commission(CSRC), the Chairman of China Insurance Regulatory Commission(CIRC), the Commissioner of National Bureau of Statistics, the President of the China Association of Banks and an expert from the academia. The opinions expressed in the meeting of the Committee will be recorded in the form of "meeting minutes". Such minutes or any resulted policy advice, if approved by more than twothirds of the members of the Committee, should be attached as an annex to the proposed decisions of the PBC on annual money supply, interest rates, exchange rates or other important monetary policy issues to be reported to the State Council for approval. In the case the PBC files its decisions on other monetary policy related issues with the State Council, it should enclose the meeting minutes or policy advice of the Committee at the same time. The Frequency of MPC Meeting The Committee performs its functions through its regular quarterly meeting. An ad hoc meeting may be held if it is proposed by the Chairman or endorsed by more than one-third of the members of the Committee. Current Members of MPC Zhou Xiaochuan (Chairman) Governor of the PBC You Quan Deputy Secretary-General of the State Council Hu Xiaolian Deputy Governor of the PBC Du Jinfu Deputy Governor of the PBC Zhu Zhixin Vice Chairman of National Development and Reform Commission Li Yong Vice-minister of MOF 17 17

4 Current Members of MPC Yi Gang Administrator of the State Administration of Foreign Exchange Ma Jiantang Commissioner of the National Bureau of Statistics of China Liu Mingkang Chairman of CBRC Shang Fulin Chairman of CSRC Wu Dingfu Chairman of CIRC Jiang Jianqing President of China Banking Association Zhou Qiren President of National School of Development of Peking University Xia Bin Director of the Financial Research Institute of the Development Research Center of the State Council Li Daokui Director of the Center for China in the World Economy of Tsinghua University FINANCIAL STABILITY The PBC is responsible for safeguarding the overall financial stability. Financial Stability Bureau (FSB) carries out the responsibilities of maintaining financial stability. FSB carries out the responsibilities of financial stability by studying the issues concerning coordination of development of banking, securities and insurance industries, and in cooperation with relevant authorities, drawing up reform and development plans of the financial industry; assessing systemic risks in the financial sector, and proposing and implementing policy measures to prevent and resolve systemic financial risks; coordinating the adoption of fiscal and monetary policy measures in risk resolution; conducting re-examination on institutions that receive lender-of-last-resort support from the central bank, and participating in the liquidation or restructuring of relevant institutions; monitoring financial holding companies and cross-sector financial instruments; examining and approving the restructuring plans for the institutions receiving lender-of-last-resort support from the central bank; managing PBC's assets that relate to financial risk resolution and financial restructuring. 18

5 Plan and Progress for the Implementation of Basel Ⅱ and Ⅲ China has taken active steps to promote the implementation of advanced approach of Basel II in the banking sector. The CBRC has introduced a series of guidance on the Basel II adoption, and has accepted the application of 6 major commercial banks for implementing Basel II in Given the issuance of Basel III, China has conducted the QIS on domestic banks, and made great efforts in improving the banking capital and liquidity framework, introducing differentiated reserve requirement to reflect the deviation of credit extension from the economic development objectives, establishing forward-looking and dynamic loan loss provisioning mechanism, improving the supervision over the SIFIs, and intensifying corporate governance and risk management of banks. Going forward, China will further participate in the reform of international financial reform, amend and formulate relevant rules and regulations, and strengthen policy coordination to ensure the full implementation of Basel III framework. The PBC s website is located at ( Authorities Responsible for Financial Supervision of the Financial Sector The PBC, the SAFE, MOF, the CBRC, the CSRC, and the CIRC carry out the role of supervising the financial sector. The CBRC mainly supervises the banking industry. The CIRC mainly supervises the insurance industry and the CSRC supervises the securities industry. The PBC, the SAFE and MOF also have some financial supervision functions in case related to their main activities. CHINA BANKING REGULATORY COMMISSION (CBRC) Functions Formulate supervisory rules and regulations governing the banking institutions; authorize the establishment, changes, termination and business scope of the banking institutions; conduct on-site examination and off-site surveillance of the banking institutions, and take enforcement actions against rule-breaking behaviors; conduct fit-andproper tests on the senior managerial personnel of the banking institutions; compile and publish statistics and reports of the overall banking industry in accordance with relevant regulations; provide proposals on the resolution of problem deposit-taking institutions in consultation with relevant regulatory authorities; responsible for the administration of the supervisory boards of the major State-owned banking institutions; and other functions delegated by the State Council

6 The Supervisory Focuses of the CBRC The Regulatory Objectives of the CBRC The Supervisory and Regulatory Criteria of the CBRC Conduct consolidated supervision to assess, monitor and mitigate the overall risks of each banking institution as a legal entity; stay focused on risk-based supervision and improvement of supervisory process and methods; urge banks to put in place and maintain a system of internal controls; enhance supervisory transparency in line with international standards and practices. Protect the interests of depositors and consumers through prudential and effective supervision; maintain market confidence through prudential and effective supervision; enhance public knowledge of modern finance though customer education and information disclosure; combat financial crimes. Promote the financial stability and facilitate financial innovation at the same time; enhance the international competitiveness of the Chinese banking sector; set appropriate supervisory and regulatory boundaries and refrain from unnecessary controls; encourage fair and orderly competition; clearly define the accountability of both the supervisor and the supervised institutions; and employ supervisory resources in an efficient and cost-effective manner. The CBRC s website is located at( CHINA INSURANCE REGULATORY COMMISSION (CIRC) The China Insurance Regulatory Commission (CIRC), established on November 18, 1998, is a ministerial-level public institution directly under the State Council. CIRC performs a unified regulatory function over the insurance market of China, according to the relevant laws and regulations and with the authorization from the State Council, in order to maintain a sound operation of the insurance industry. The CIRC s website is located at ( CHINA SECURITIES REGULATORY COMMISSION (CSRC) The China Securities Regulatory Commission (CSRC), a ministeriallevel public institution directly under the State Council, performs a unified regulatory function, according to the relevant laws and regulations, and with the authority by the State Council, over the securities and futures market of China, maintains an orderly securities and futures market order, and ensure a legal operation of the capital market. 20

7 The China Securities Regulatory Commission is located in Beijing, with appointed one chairman, four vice chairmen, one secretary of the Disciplinary Inspection Commission (on the vice-ministerial level) and three assistants to the chairman. CSRC has eighteen functional departments, one inspection division and three centers. In accordance with Article 14 of the Securities Law of the People s Republic of China, CSRC has set up a public offering review committee, which is formed of professionals of CSRC and invited experts from without the committee. China Securities Regulatory Commission has established thirty-six securities regulatory bureaus in provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan, and, in addition, Shanghai Commissioner Office and Shenzhen Commissioner Office. The CSRC s website is located at ( Address: No. 32, Chengfang Street, Xi Cheng District, Beijing, CHINA Postcode: Telephone: (86-010) ; webbox@pbc.gov.cn Website: pbc.gov.cn 21 21