Banking

Do not overlook potential systemic risks, Liu says

(Agencies)
Updated: 2010-09-09 10:40

China's top banking regulator warned lenders not to neglect the possible exposure of the banking sector to systemic risks, and to develop a long-term mechanism that focuses on capital and risk management.

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Liu Mingkang, head of the China Banking Regulatory Commission (CBRC), also said China's banks are still weak in liquidity risk management, and they need to improve their stress tests in terms of the tools and techniques used and the application of the results.

China's regulatory framework is not up to the challenges posed by the latest changes sweeping global finance, he said. He urged China's banking institutions to have a clear understanding of the changes that have occurred since the global financial crisis, and to keep up with the new trends in international regulatory reform.

Liu's remarks were published Wednesday on CBRC's website, www.cbrc.gov.cn.