CBC to extend financial examinations to securities, finance companies

Taipei, July 6, 2004 (CENS)--In line with the establishment of the Cabinet-level Financial Supervisory Commission (FSC), the Central Bank of China (CBC) has recently revised guidelines for examinations on financial institutions.

Based on the revisions, the CBC will expand monitoring scopes to include such payment and clearance institutions as securities and finance companies. In addition, CBC's examinations on insurance companies will not be confined to only their credit departments.

CBC said it made revisions to cope with the establishment of the FSC because CBC will focus its examinations on the credit, foreign-exchange and monetary operations associated with its monetary policies.

A CBC official said his bank would launch case-by-case financial examinations under the following situations: understanding the compliance of domestic financial institutions with CBC's monetary, credit, foreign-exchange policies; the occurrence of major undesirable events at financial institutions, which may impact the stability of the overall financial system and the security and efficiency of the payment and clearance system; the occurrence of irregular financial transactions under CBC's jurisdiction; the application of financial institutions for cash accommodation from CBC; reviewing the corrections of financial institutions committing operating defaults; and special examination jobs commissioned by FSC, among others.

To accurately keep a tight grip on the financial transaction information and maintain the stability of the financial market, the FSC will set up a financial supervisory linking panel with members composed of FSC chairman and deputy chairman, CBC deputy governor, director general of CBC's banking examination department, Central Deposit Insurance Corp.'s chairman, director generals of FSC's banking, securities & futures, insurance and inspection bureaus, among others. The proposed panel will establish an information-sharing mechanism and the crisis-proceeding procedure for financial institutions.