Chinese Financial Supervision in the Post—Financial Crisis Era

Abstract ： The outbreak of the U.S. subprime mortgage crisis in 2008 has already evolved into a global financial crisis whose impact is unprecedented. This paper aims to provide some guidelines and work out a series of rational measures to strengthen China's financial supervision in the post-financial crisis era.

Key words ： Financial Supervision； Bank Industry； Security Industry； Insurance Industry

1. Problems in Chinese current financial market

1.1 The Security Sector

At present， centralized and unified supervision model is adopted in our country. However， it is unable to do well only by relying on regulatory commission and its agency. Self-regulatory organizations are of disorderly management and they are independent. Defects of corresponding matched implementing regulations and laws result in current transactions' lacking in necessary management basis.

The barricade in coordination blocked the efficiency of the supervision a lot. At present， security supervision departments are tired of coping with ongoing recurrent problems in security market and lacking in research on medium and long term strategic planning of securities market.

1.2 The Insurance Sector

Overregulation coexists with insufficient

regulation on critical fields such as solvency and business risks in current supervision system. When there are considerable differences on the risk control and management opinions of the same business in different regulatory institutions， overlapping business may become the domain of regulatory gap.

The companies with poor management and illegal operation will continue to exist in the market， which harms companies with outstanding achievements. Without standard information disclosure channels， the public cannot timely and entirely obtain the important information. It inevitably indulges in misleading the publicity.

1.3 The Banking Sector

The independent status of People's Bank

has not been fully established. Fragmented departments within the People's Bank lead to intersected banking supervision and the phenomenon of \"scrambling for supervision\" and \"regulatory vacuum\" of regulatory departments and supervision office of central sub-branch.

The legal framework for monitoring， warning and controlling mechanism of financial risk in legislative orientation has not yet been set up. Incomprehension in related laws and regulations and unfamiliarity in the business of relevant supervisors lead to low regulatory efficiency.

2. Suggestions for Improving Chinese Financial Supervision

2.1 Suggestions for Insurance Sector

The authorities shall enhance coordination

and cooperation of the whole financial supervision. The authorities should exchange supervision information， solve vital problems and jointly build up public systems in financial supervision designedly and purposefully， such as notification system， interpellation system. In addition， the authorities ought to ameliorate methods and strengthen joint supervision so as to enhance the standard and efficiency of integrated supervision continuously and take precautions against financial risks effectively.

It shall be explicitly stipulated that the self-regulatory organizations undertake the management of daily business； they have the right to establish and implement management rules of daily business and exercise the disciplinary function.

2.2 Suggestions for Security Sector

The system shall be operated through qualification and performance appraisal of the self-regulatory organizations as well as examination and approval， authorization and arbitration of the self-regulatory management rules. Government shall take measures to urge the stock exchanges and securities companies to build up the supervision of markets division and strengthen internal management. It should construct the mechanism of information exchange and sharing， guide and encourage the mutual business integration and build the financial supervision system with the multiplication and multi-level of main body.

The associations shall participate in formulating decision-making verification of the industry development and reform to realize orderly competition as the industry representative. They shall provide services to members in different forms to increase the transparency as the advisor of enterprises. The associations shall communicate with the public as much as possible.

2.3 Suggestions for Banking Sector

Basel Accord III requires that the banks

shall carry out steady operation and practice risk management in an all-round way. It is required to build the scientific quantitative model and prepare enough capital funds for the risk management. Meanwhile， while performing functions of supervision， we shall take on-site supervision and non-on-site supervision， and formulate the system to ensure that laws are strictly enforced and violators must be brought to justice.

The banks shall set up scientific monitoring and early warning system of capital adequacy ratio. The bank shall establish internal capital adequacy goal which will be inspected by the regulator and restrained by the market.

REFERENCES

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3.Eichengreen， Barry.（2008） Thirteen Questions about the Subprime Crisis： Berkley University of California，

4.Gilian.Tett.（2009）， \"Bank Policymakers Struggle to Increase Oversight Without Stifling Innovation，\" Financial Times， 34-53

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（作者單位：天津工業大學）