Research Handbook on Central Banking
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Research Handbook on Central Banking

Edited by Peter Conti-Brown and Rosa M. Lastra

Central banks occupy a unique space in their national governments and in the global economy. The study of central banking however, has too often been dominated by an abstract theoretical approach that fails to grasp central banks’ institutional nuances. This comprehensive and insightful Handbook, takes a wider angle on central banks and central banking, focusing on the institutions of central banking. By 'institutions', Peter Conti-Brown and Rosa Lastra refer to the laws, traditions, norms, and rules used to structure central bank organisations. The Research Handbook on Central Banking’s institutional approach is one of the most interdisciplinary efforts to consider its topic, and includes chapters from leading and rising central bankers, economists, lawyers, legal scholars, political scientists, historians, and others.
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Chapter 7: Specific challenges to the People’s Bank of China in a new wave of financial reforms

Zhongfei Zhou


The People’s Bank of China (hereinafter PBOC) is facing several challenges in a new wave of financial reforms in China. The PBOC’s independence is always criticized. Taking into account the Chinese political system, however, central bank independence is less significant in China than in western countries. By contrast, legal provisions relating to the PBOC’s accountability to the National People’s Congress, the State Council and the Judiciary need to be improved. To fulfil its financial stability mandate, the PBOC should be provided with law-based financial stability instruments. The importance of a central bank in financial regulatory system has increasingly been recognized across countries after the global financial crisis. It is recommended that China’s Coordination Meeting System be legally upgraded to become a financial stability oversight committee, established within the PBOC, which brings together the expertise of central and local financial regulatory agencies and even independent experts in relevant fields. With respect to China’s deposit insurance scheme, priority should be given to preventing runs, and the moral hazard consideration should be secondary to preventing runs in the trade-off between preventing runs and limiting moral hazard.

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