In summary, as regulator, our approach will be to identify areas of higher risk in each institution’s operations and to work with the management to reduce these risks to acceptable levels. The riskbased supervisory approach is recognized to be ideal for identifying problems at an early stage rather than attempting to fix them after they have developed.
In the latter half of 2005 when commercial bank reform yielded preliminary result, the ability and motivation of commercial bank to lend increased remarkably. When financial institutions were better able and more willing to expand the business and foreign exchange continued to flow into China, an important challenge in front of us was to be more proactive in macro-economic management.