Risk Based System Design of Banking Supervisory in China: A Framework

It is important to bear in mind that banking supervision has become more focused in recent decades on the risk management function of commercial banks. After the assessing of the financials system in China, the paper points out a risk based framework for banking supervisory system which will supply a flexible and differentiated risk based approach to setting standards and to supervision, reflecting the nature of the business activities concerned, the extent of risk within particular firms and markets, quality of firms' management controls and the relative sophistication of the consumers involved, hopingly ensure greater consistency in the supervisory process and establishes suitable practice in the supervision of banks. The system is intended to be flexible and to allow individual supervisors to exercise their own judgment within a systematic framework.