Meanwhile, with a unified inter-bank foreign exchange market being established, China began a new stage where the RMB exchange rate was based on market supply and demand. The RMB, as an important price tool, started to play a fundamental role in the allocation of foreign exchange resources.
The framework adopted by banks would need to be adaptable to changes in business size, market dynamics and introduction of innovative products by banks in future. •  Introduction of Risk Based Supervision (RBS) in 23 banks on a pilot basis. •  Encouraging banks to formalize their Capital Adequacy Assessment Programme (CAAP) in alignment with business plan and performance budgeting system.