Banking reforms continue in China

Will include deposit insurance.

The China Banking Regulatory Commission, the banking regulator, is still working to establish mechanisms for deposit insurance and winding down insolvent banks.

CBRC chairman Shang Fulin said this requires all financial regulators to promote reform and pay closer attention to how financial institutions monitor risks and adapt to changes.

The transition of China’s economy from a model centered on high growth to one of modest but more stable expansion requires the financial industry to provide more comprehensive services and allocate resources more efficiently, he said

The current banking business model relies heavily on interest spreads between deposits and loans. Shang said banks should no longer interpret growth as just greater market share and greater assets. Instead, they must change structurally.

Shang listed five areas for regulation priority: developing differentiated financial regulations for private financial institutions; encouraging banks to serve the real economy; improving banks' internal risk control; strengthening coordinated regulations and building a balanced financial market with greater direct financing.

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