Banking

China regulator urges banks to adopt Basel III-paper

(Agencies)
Updated: 2010-11-10 11:19

A senior Chinese banking regulator urged the country's lenders to conform to the Basel III rules - the new set of global banking regulations, in a bid to improve international competitiveness, the official China Securities Journal reported on Wednesday.

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Cai Esheng, vice chairman of the China Banking Regulatory Commission (CBRC), told a forum in Beijing that banks should set up comprehensive risk-management systems that conform to Basel III, and shift toward quantitative risk measurement and capital management, the newspaper said.

China should actively participate in global banking regulatory reforms, and should promote useful financial innovation while caution against a repeat of the "shadow banking" crisis in some overseas countries, the newspaper said.

Many believe that the shadow banking system, under which non-depository financial institutions operate beyond the radar of banking watchdogs, played a major role in the recent global financial crisis.

CBRC vice chairman Wang Huaqing said in September that the Basel III rules would have no immediate impact on Chinese banks, but that they could constrain capital raising in the next decade.

Basel III rules set minimum capital and liquidity standards, to try to create a more resilient international banking system, after the financial crisis.