Establishment of New Commission Completes China's Tripartite Finance Regulatory System

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Last updated at: (Beijing Time) Wednesday, April 30, 2003

Establishment of New Commission Completes China's Tripartite Finance Regulatory System

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China's banking regulatory body,the China Banking Regulatory Commission (CBRC) was established in Beijing on Monday, ending months of speculation on when and how China would introduce supervision of its banking sector.

The establishment also brought a halt to the dual role that thePeople's Bank of China (PBOC), China's central bank, had played asa financial supervisor and currency policy-maker.

The PBOC will be able to concentrate on macro economic management as the CBRC assumes control over regulation of the national banking operation, said Lu Baifu, a member of China's Financial and Economic Committee of the National People's Congress(NPC).

China established the China Securities Regulatory Commission (CSRC) and the China Insurance Regulatory Commission (CIRC) in the 1990s. Now with the establishment of the CBRC, China has finalizedthe installment of regulatory institutions into the three major financial sectors of securities, insurance and banking, Lu said.

Lu said the completion of the tripartite financial regulatory system, comprising of securities, insurance and banking, would improve the country's macro economic function and management of potential financial risks.

Liu Mingkang, former governor of the Bank of China (BOC), one of China's four state-owned commercial banks, will chair the commission. Liu has spent over 20 years working within the bankingsector and is recognized as one of China's most experienced bankers.

In a statement posted on the CBRC website, Liu said the commission would work closely with the PBOC to "enhance regulationof China's banking system and therefore help the PBOC to further focus on the macro-economy and currency policy", defusing concernsthat the CBRC would conflict with the PBOC when exercising supervisory power over China's banking industry.

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