China to move on with stricter bank rules

China to move on with stricter bank rules

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A senior banking regulator said on November 20, 2012, that China will not follow other economies in delaying the implementation of tougher capital requirements on banks. Wang Zhaoxing, the vice chairman of the China Banking Regulation Commission said that the country will allow banks to introduce new instruments to raise capital.

Wang said that the country will not follow the footsteps of the US, Europe or any other economies which have opted to postpone the adoption of tougher banking requirements which are needed by global regulatory standards. The vice chairman added, “China has promised to anticipate the establishment of the global financial supervision system and adopt the international standards”.

Wang added that more importantly, China took its domestic situation and their own development needs into consideration when they drafted the rules. He also said that regulators want to improve the ability of banks to manage risk and encourage banks to improve their business structures.

The banking regulator expects the new rules to help bankers improve their capital quality. The regulators will soon release guidelines to encourage banks to develop capital instruments, which will help them replenish their capital. These instruments are likely to come up before the end of the year.