With the development of the Chinese economy, the deepening of financial reform, steady improvement of management skills in the Chinese financial institutions and the strengthening of profitability, the Chinese banks realized profits totaling 253.2 billion yuan in 2005, compared with 23.2 billion yuan in 2001.
To improve the terms of this trade-off it is essential to proceed decisively with the reforms of financial regulation and supervision already outlined by the Financial Stability Board and the Basel Committee. The aim of these reforms is to correct the serious incentive distortions revealed by the crisis and, in this way, to make financial systems both more resilient and less pro-cyclical.