Part 1 Overview of the Financial Industry in China

OverviewoftheFinancialIndustryinChinaPartOneLearningObjectivetheinstitutionstructureoftheBankingsectorinChina;functionandreformprogressofCentralBank;reformanddevelopmentofcommercialbanking;supervisionofbankingthestockmarket,securitiesclassification;roleofthesecuritiessectorinnationaleconomy,anddevelopmentofinsurancesectorinChina;riskclassification,riskandprevention;actuarialtheory,andinnovationandprospectionoftheinsurancesectorLearningPointsKnowledgeofbankingsector:evolutionandroleofbankingsectorinChina;theroleandfunctionofcentralbank;thedevelopmentofcommercialbank.LearningdifficultiesMathematicfoundationknowledgeinvolvedininsurancesector.ChapterOverviewI.BankingSectorII.SecuritiesSectorIII.InsuranceSector1.TheevolutionandRoleoftheBankingsectorinChina2.TheReformandFunctionoftheCentralBank3.VigorousDevelopmentoftheCommercialBankingSector4.IncreasedOpennessoftheBankingSector5.StrengthenedBankingSupervision6.ProspectsforBankingSectorDevelopmentI.BankingSectorI.BankingSectorEvolutionofBankingofChina1.TheevolutionandRoleoftheBankingsectorinChinaRoleoftheBankingSectorinChinaRoleofChina’sBankingSectorineconomy1.TheevolutionandRoleoftheBankingsectorinChina①Aprincipalrepositoryofliquidfundsforthepublic②Facilitatingefficientallocationofscarcefinancialresources③Transmittingimpulsesofmonetarypolicy④Nationalpaymentsmechanism⑤ReducingrisksthroughaggregationI.BankingSectorRoleoftheBankingSectorinChinaOriginoftheAssimilatedMoney•EnterprisesDeposit（corporatedeposit)•UrbanandRuralResidentsDeposit(naturalpersondeposit）（TwoOrigins）OfferLoans•Gainprofit•Supportproductionandvariouscareerdevelopment•Promotethecirculationofcommodities（twomajorpurposes）TransactSettlement（TwoForms）•Cashsettlement----usecashtomakepayment•Accounttransferring----paymentwillbemadebyaccounttransferringthroughthebankacountofeachside(receiptsanddisbursements)ThreeMajorServices吸收存款银行单位存款居民存款发放贷款工商业贷款消费贷款类型买方（付）卖方（收）结算Issuedbydrawer，paidbybankCreditInstrumentsforSettlementChequeIssuedbydrawer，paidbybankCashCheque&TransferChequeBillofExchangeTelegraphicTransfer/Cabletransfer&MailTransferCreditCardCreditcertificateissuedbybanktocorporateorindividual(Intra-city）（othercity）Deposit,loan,consumption,settlement,inquiresBankABankAccountBBankAccount……EnterpriseAEnterpriseBSell￥10,000worthofproductsAissueBa￥10,000transfercheckOfferCheckBooksGivechecktoBankBankOperations_AissueBa￥10,000B/EOfferB/EGiveB/EtotheBankEnterpriseAA’sBankEnterpriseBB’sBankA’sAccount……B’sAccount……ApplyB/EDifferentplaceCityXCityYTransfer&settlementbetweenthetwobankswillbedoneinthePBC.Sell￥10,000worthofproducts①Phase1(1948-1984)Amono-bank––––PBC②Phase2(1984–1993)Fourbigstate-ownedspecializedbanksappeared:ICBC;ABC;BOC;CCB③Phase3(1993–2001)Morebanksappeared:“”④Phase4(2001–Now)Anumberofeffectivemeasureshavebeenadoptedsincethen,andadiversifiedandcompetitivebankingsystemofChinahasbeengraduallydeveloped1.TheevolutionandRoleoftheBankingsectorinChinaI.BankingSectorEvolutionofBankingofChinaXEffectivemeasures①Establishingasoundandrobustfinancialsystemtoguardagainstanddissolvefinancialrisks②ofthebanks③Improvingtheownershipofthebanks④Strengtheningofthebanks⑤Developingmarketinfrastructure⑥Enhancingsupervisorycapacity⑦FurtheropeningthebankingsectortoforeignparticipationI.BankingSectorBalancesheetscorporategovernanceThebankingsectorhasbeenplayinganimportantroleinfacilitatingtheimplementationofthestabilizationandstructuralmeasuresaswellassustainingstrongeconomicgrowth.1.TheevolutionandRoleoftheBankingsectorinChinaRoleofChina’sBankingSectorineconomyI.BankingSectorEightFunctions2.TheReformandFunctionoftheCentralBankI.BankingSectorFurtherReformoftheCentralBankIndirectMonetaryPolicyInstrumentsDirectMonetaryPolicyInstrumentsDefinitionofCentralBankEverycountrywithanestablishedbankingsystemhasacentralbank,whichactsasbankertotheGovernmentinthewidestsense.ItliaiseswithandadvisestheGovernmentonmonetarypolicyandensuresthatthenecessarystepsaretakentocarryitthrough.2.TheReformandFunctionoftheCentralBank①Formulate&implementmonetarypolicy②Issuecurrency®ulateitscirculation③Manageofficialinternationalreserves④Regulateinter-bankmoneymarket,inter-bankbondmarket,foreignexchangemarketandgoldmarket⑤Actasfiscalagent⑥Maintainpayment&settlementsystem⑦Combatmoneylaunderingactivities⑧ParticipateininternationalfinancialcooperationI.BankingSectorEightFunctions①Significantrestructuringforthestructure②Consolidatingsupervisoryfunctionsandtransferringthemfromthecentralbanktonewsupervisorybodies③Strengtheningthekeyfunctionofmaintainingfinancialstabilityanddevelopmentofmarketinfrastructure,establishingtheFinancialStabilityBureau,theFinancialMarketDepartment,andShanghaiheadquarterofthePBC.④Greaterrelianceonindirectmonetarypolicyinstruments,abolishingdirectones2.TheReformandFunctionoftheCentralBankI.BankingSectorFurtherReformoftheCentralBank①Requiredreserveratio②Interestrateadjustment③Openmarketoperation2.TheReformandFunctionoftheCentralBankI.BankingSectorIndirectMonetaryPolicyInstrumentsState-ownedcommercialbanks（aphasedreformofSOB)Joint-equity