Following the establishment of securities regulatory commission, we set up insurance and banking regulatory commissions to materialize separated operation and regulation with a view to strengthening regulation on various financial institutions. (2)  Reform on property right system was introduced in state-owned commercial banks.
The Asian financial crisis made us realize that inefficient operation of state-owned commercial banks had become the main obstacle to the stability of financial system, with bad loans cumulated over the past years and inefficient banking governance structure putting China’s financial system into a more vulnerable situation.