Abstract:
China’s economic development has entered a new normal. It puts forward higher challenge for the regulators on how to push the banking industry to adapt to the new normal. Ten relationships need to be well managed, since they are very important for carrying out banking regulations under the new situation. In terms of regulatory objectives, it needs to find the right balance between preventing financial risks and serving the real economy. In terms of regulation positioning, the regulatory policy needs to harmonize with macro-control policies, such as monetary policy and fiscal policy. In terms of basic regulatory methodology, it needs to maintain the combination of micro-prudential and macro-prudential supervision, balance between enhancing supervision and encouraging innovation, and focusing on scientific supervision while improving the art of supervision. In terms of regulatory approach and specific method, it needs to felicitously handling the following five relationships, namely the relationship between principle-based supervision and rule-based supervision, between consistent and differentiated supervision, between institutional supervision and functional supervision, between international standards and China’s reality, between regulatory policy and supervisory practice. Only if the above ten relationships are properly managed can we further improve the effectiveness of banking supervision and make finance play the core role in modern economy.
