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How is the Banking System in China?
Chinese banking history
Wonder what kind of institution counts as a bank in China and how is the current banking system? Banking in China doesn’t have as much time as, say, the UK. The English were the first to establish a bank in China in 1845, but the first bank run by Chinese would only come in 1897.
Before, banking in China used to develop depending on the economic system of China. The People’s Bank of China (“PBC”) acted as both central bank and commercial bank during the planned economy system that used to be implemented in China, but since reforms have made and the market has opened, this bank started to function only as the central bank, with the aim of creating and setting up financial policies, safeguarding against financial risks and keeping up the stability in the Chinese financial system.
Bank Accounts in China
Right now China incorporates the central bank, different banking financial institutions, financial institutions not related to banking and regulatory entities in its financial system.
The aforementioned banking financial institutions are composed of commercial banks, banks that implement policies, banks that manage savings and overseas banks. As we already said the PBC is the central bank and only the institutions that the regulatory bodies approve can count as commercial banks. Banks that implement policies which are also named non-commercial banks are banks that have been created by the Chinese government with the aim of setting and running economic policies without profit being their objective.
Only the entities that have been set up or approved by the government can count as banks in China, even if they run banking activities. This might be a big difference with the law in other countries.
Strictly speaking only the central bank and other banking financial institutions can utilize the word “bank” in the names associated with them. Investment banks count as non-banking financial institutions so other entities that aren’t overseas banks, be it Chinese funded or a joint venture, cannot utilize the word “bank” in the names associated with them but it can be used to set up a bank account in China.
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