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The China Banking Regulatory Commission's guidelines on reputational risk management in commercial banks apply to all Chinese commercial banks, banks established through equity joint ventures and foreign-invested banks. They require banks not only to integrate reputational risk management into their corporate governance and overall risk management, but also to minimize adverse effects on the public and society.

In an attempt to strengthen China's economic exchange with foreign countries, the government announced the launch of a renminbi cross-border trade settlement pilot programme, for which the People's Bank of China and ministerial authorities have issued implementing regulations. The scheme will affect background clearing between Chinese and foreign banks.

With Chinese banks' loan business growing rapidly - along with fears of inflation - the China Banking Regulatory Commission has released a consultative note on a draft circular on capital replenishment mechanisms. The draft circular indicates the government's intention to tighten capital adequacy ratio requirements for Chinese banks and to curtail bank lending.

The People's Bank of China and the Hong Kong Monetary Authority have signed a currency swap agreement which enables short-term liquidity support to be provided to the mainland operations of Hong Kong banks and the Hong Kong operations of mainland banks, as necessary.

The People's Bank of China and the Hong Kong Monetary Authority have announced a multi-currency cross-border payment arrangement between the mainland and Hong Kong. The arrangement covers cross-border payments and settlement in four currencies.

Rules newly in force are likely to complicate the acquisition or disposal of interests in financial enterprises. Among other things, they confirm that transfers of state-owned interests in unlisted financial institutions are subject to a mandatory public auction or tender process, unless a special approval for transfer by private agreement is obtained from the State Council or the financial authorities.

After a two-year moratorium on the establishment of, and investment in, Chinese securities companies, the new Rules on the Establishment of Securities Companies with Foreign Equity Participation and their subsidiary provisions demonstrate the government's encouraging, if cautious, approach to creating a clearer regulatory framework and enabling a gradual opening of the industry to foreign investors.