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Banker appeals for reform of global financial systems

By Nie Peng (chinadaily.com.cn)
Updated: 2008-11-17 17:08

Jiang Jianqing, chairman of the Industrial and Commercial Bank of China, told a forum in Beijing on Friday that the financial crisis had exposed some major problems in global financial systems.

The global financial supervision system, such as cross-boarder supervision on hedge funds, derivatives and asset-turned securities, needs an overhaul, he told the 2008 Tsinghua Global Management Forum during a keynote speech.

He called on attention to the relationship between savings and consumption. He said the crisis also reflected a crisis in the credit economy embodied by the United States.

In his opinion, the financial innovation that has caused severe confrontation between the speculative economy and the real economy also needs rethinking. He warned that the risks involved in some derivatives were covered up as their original financial asset conditions were often unknown to investors.

He criticized ratings given by some international rating agencies during the crisis as "not objective, fair, transparent or even professional", which made it difficult for investors to see the real risks involved in their trading.

Jiang told the forum that the international accounting rules, set by the US and suspended when the crisis hit, will be revised soon. The international monetary system and the global financial markets should be overhauled as well, he added.

He said the crisis also reflected problems in corporate governance of financial institutions. Chinese banks should draw lessons from the crisis and explore sound corporate governance and risk control systems, he noted.