Challenges for the Unified Financial Supervision in the Post-Crisis Era: Singaporean Experience and Chinese Practice

Journal Article

Jing Geng, Wenjuan Xie, Guibin Zhang*, Honggeng Zhou
*Adjunct Research Fellow

Published in Journal of Financial and Economic Practice 2011, Volume 11(2) Please contact the authors for a copy of the full paper.

SUMMARY: In an era when financial conglomerates become more and more prominent, and amid the increasing concerns in academia over the effectiveness of supervision by multiple regulatory and supervisory agencies, this paper reviews the origin and development of the Chinese financial system supervisory practice, and it analyses the Chinese case to see whether an integrated financial supervision model is suitable for the economic giant. We focus on the integrated financial supervision adopted by the Monetary Authority of Singapore (MAS) in response to the emerging international trends of blurring boundaries between financial industries of banking, insurance and capital markets, as well as the rapid growth of financial conglomeration. Integrated supervision can centralize regulatory functions and maximize economy of scale, thus reducing the operating costs of financial supervisory entities. However, there are also some drawbacks of the practice and foreseeable feasibility issues in the transition towards integrated financial supervision in a country whose financial system is still in the gradual process of opening and integration. Weighing on the pros and cons and accounting for potential issues in its implementation, the paper finally proposes a gradual solution for China to move towards integrated financial supervision.