A detailed assessment report on the observance of China’s compliance of Basel Core Principles for effective banking supervision is presented. Regulation and supervision of China’s banking system has made impressive progress in the past few years, led by an activist, forward-looking regulator, the China Banking Regulatory Commission, with a clear safety and soundness mandate that has been supported by banks and by the State. The macroeconomic environment is characterized by rapid growth, with concerns about overheating and asset price overvaluation.
International Monetary Fund. Monetary and Capital Markets Department
This paper presents an assessment of the level of observance of the Basel Core Principles for Effective Banking Supervision (BCPs) in China. The China Banking Regulatory Commission (CBRC) has maintained its momentum in regulation and supervision in the face of exceptional growth in scale and increasing complexity of the banking system. The CBRC has also achieved a high degree of compliance with the BCPs. However, several dimensions of credit risk, including treatment of problem assets, concentration risk and related party exposures have aspects in which they lag international best practices and standards. Failure to resolve these issues may hamper the CBRC in its task of assessing the nature and scale of credit risk in the system and within individual institutions.
This paper evaluates observance of the Basel Core Principles for Effective Banking Supervision in the Russian Federation. The legal framework currently in place provides the Central Bank of Russia (CBR) with necessary powers and responsibilities. The CBR may authorize banks, conduct ongoing supervision, oversee compliance with laws, and undertake corrective action to address safety and soundness. Major new reforms increase many aspects of the CBR’s duties and powers, although implementation has not yet been tested in all cases. The Russian licensing regime for banks appears exhaustive. However, the legal regime for major acquisitions was found to be weak.