In May 1999, the International Monetary Fund (IMF) and World Bank jointly launched the Financial Sector Assessment Program (FSAP) to assess the financial systems and related areas of their member countries, measure their financial risks and promote financial reform and development. Gradually developed and improved, the FSAP has become a framework of financial stability assessment widely accepted by the international community. The latest international financial crisis highlighted the importance of comprehensive assessments, further enhancing the FSAP s status.
After consultations with the IMF and the World Bank, China formally started FSAP exercise in August 2009. The People's Bank of China and relevant institutions established a working mechanism and actively promoted and facilitated the assessment. According to the assessment plan, the IMF/World Bank FSAP team conducted two on-site assessments respectively in June 7-25 and November 30-December 15, 2010.
On the two missions, the team held more than 300 talks with related institutions and agencies. In addition, as required by the mission, the Chinese side answered questionnaires, provided data and needed information. The assessment progressed smoothly with the joint efforts of both sides.
On December 15, Zhou Xiaochuan, Head of China s FSAP inter-ministerial leading group and Governor of the People's Bank of China, met with Mr. Jos Vi als, IMF financial counsel and director of Currency and Capital Markets Department, who was on a special visit to attend the Conclusive Meeting of the Second China FSAP on-the-spot assessment; Mr.
Tunc Uyanik, Sector Manager for Financial and Private Sector Department Unit of East Asia and Pacific Region; as well as the Head and the Deputy Head of the FSAP mission in Beijing. Governor Zhou welcomed the team and expressed appreciations for their efforts, saying that the Chinese government attached great importance to the FSAP exercise in China and hoped that the results and recommendations of the IMF/World Bank assessment would be a useful reference for China to reform and develop its financial system.
The IMF/World Bank team said that as a systemically important country, China's FSAP assessment carried significance not only for China but also for the two institutions. Through the joint efforts and close cooperation, the two sides achieved more than expected in the assessment.
Commissioned by Governor Zhou Xiaochuan, Mr. Liu Shiyu, Deputy Governor of the PBC and Deputy Head of China's inter-ministerial FSAP leading group, exchanged views with Mr. Jos Vi als, Mr. Tunc Uyanik and the FSAP mission chiefs on the main conclusions of the assessment and the reform proposals. Wang Huaqing, Chief Disciplinary Officer of the CBRC, Yao Gang, Vice Chairman of the CSRC, Li Kemu, Vice Chairman of the CIRC, and Sun Xiaoxia, Director General of the Financial Sector Department of the Ministry of Finance, attended the meeting.
The mission was impressed with what China achieved in its financial system reform over the past three decades. The mission also said that China had a vibrant and robust financial sector and successfully protected itself from the impact of the financial crisis, which should be attributed to a number of major reforms in the financial system and the effective regulation and supervision by the central bank and the regulatory authorities.
The mission believed that China's financial system faced both unprecedented opportunities and significant challenges. The team summarized their findings and made recommendations on how to cope with the short-and-medium-term risks facing its financial system, the focus and the sequencing of further financial reforms.
The Chinese side appreciated the excellent work of the mission, and it would carefully study the mission s assessment report and the related technical documents, further improve the financial legislations and regulations on the basis of full absorption of the assessment suggestions, and improve management of the financial sector to effectively maintain financial stability.
On the same day, Xuan Changneng, Head of China s inter-ministerial FSAP working group and Director General of the Financial Stability Bureau of the PBC, presided over the Concluding Meeting of the Second China FSAP On-the-spot Assessment. More than 80 members, including the whole FSAP mission team and all representatives of the inter-ministerial working group attended the meeting.
Mr. Jonathan L. Fiechter, FSAP mission Chief of the IMF, and Mr. Thomas A. Rose from the World Bank, gave the general situation of China's FSAP assessment, its main conclusions and the plan for next step. The assessment exercise is expected to end in July 2011.
