Central bank Governor Dai Xianglong vowed yesterday to help China's financial institutions enter and strengthen their presence in more lucrative businesses, such as on-line banking, to make the sector more competitive.
The People's Bank of China (PBOC), the central bank, would support financial institutions exploring new ground like intermediate businesses, international businesses and Internet-related banking services as far as the law permits, to help them face the challenges expected from China's entry to the World Trade Organization, Dai said.
"On the basis of prudent operations, the business scope of banks can be broadened," he said during a meeting of senior officials from major banks. "This could help domestic banks compete with foreign banks and bring more profits."
China's Commercial Bank Law allows the central bank to determine new businesses for financial institutions.
Dai said it will take time for China to allow banks, insurance firms and securities brokerages to integrate their activities, although such changes are part of a global financial trend. The existing framework, which splits up the industry, is "suitable for the status quo in China," said Dai.
"There is still some way to go, but there could be some breakthrough in intermediate businesses," he said, without providing specifics.
He also said the bank would take "various measures" to recapitalize commercial banks and bring their capital adequacy ratios, a crucial measure to fend off financial risks, up to international standards by the end of next year.
The central bank is stepping up efforts to improve its legal framework in preparation for changes to the financial landscape after China's WTO entry.
(China Daily March 18, 2000)
