Intent Declared Summary

In its 2007 Financial Stability Report (FSR), the People's Bank of China (PBC) refers to the China National Advanced Payment System (CNAPS) as a core inter-bank payment system. The CNAPS has two sub-systems: (1) a large-value payment system (LVPS), which is a real-time gross settlement (RTGS) system, and (2) a bulk electronic payment system (BEPS), which is a small-value payment system. The 2005 FSR remarks that the design of CNAPS takes into consideration the Committee on Payment and Settlement Systems' (CPSS) Core Principles for Systemically Important Payment Systems (CPSIPS) and that CNAPS has basically met the requirements for safety and efficiency of the CPSIPS. In its 2008 FSR, the PBC observes that, in 2007, China's payment system progressed steadily, witnessing new developments in institution building and improvements in payment and settlement-related laws and regulations. However, both reports note that there is still room for improvement in some areas, including strengthening the PBC's oversight of the payment systems. Based on the results of the World Bank’s 2008 Global Payment Systems Survey, Cirasino and Garcia’s 2008 report evaluates a country's compliance with four distinct sub components which are broadly based on the CPSIPS. In general, the report states that China achieves "medium-high level of development" for its large value payment systems. However, on the assessments components on legal and regulatory framework for payment systems, China achieves only "medium-low level of development." Nevertheless, the information contained in this report, although useful and informative, cannot be used to decipher China’s compliance with the CPSIPS.

General Overview

According to the 2007 Financial Stability Report (FSR) by the People's Bank of China (PBC), the central bank owns and operates the China National Advanced Payment System (CNAPS), which is of “systemic importance" (p. 76). Launched in 2005 and fully operational in 2007, the CNAPS is referred to as a core inter-bank payment system by the PBC in the 2007 FSR. The CNAPS has two sub-systems: a large-value payment system (LVPS), which is a real-time gross settlement (RTGS) system, and a bulk electronic payment system (BEPS), which is a small-value payment system. According to the China Payment System Development Report 2008, published in 2009, apart from the LVPS and BEPS, the PBC also operates the Check Image System (CIS), established nationwide since June 2007, and Automated Clearing Houses. Other payment systems in China (not operated by the PBC) include intra-bank payment systems of banking institutions, China UnionPay (CUP) Inter-bank Clearing System, Draft Processing System of city commercial banks, and Fund Clearing System of rural credit banks. The China Payment System Development Report 2007, published in March 2009, states that China has “preliminarily established a payment and clearing system, which centers on HVPS (high-value payment system, same as LVPS) and BEPS with intra-bank payment system as the basis, CIS, automated clearing house, bankcard payment system, draft processing system of city commercial banks and fund clearing system of rural credit banks as important components” (p. 44).

Based on the results of the World Bank’s 2008 Global Payment Systems Survey, Cirasino and Garcia’s 2008 report “Measuring Payment System Development” evaluates China's compliance with four distinct sub components which are broadly based on the Committee on Payment and Settlement Systems' (CPSS) Core Principles for Systemically Important Payment Systems. The four components of the Cirasino and Garcia assessment are (1) legal and regulatory framework; (2) large-value payment systems; (3) retail payment systems; and (4) the enabling environment for the payment system oversight function. The first component, the legal and regulatory framework, covers Core Principle (CP) I and to some extent CP II. The second component large-value payment systems "is based on two subcomponents: (1) system design and key policy decisions that affect the safety, soundness and efficiency of the system; and (2) the actual usage of the large-value system in terms of the share of the settlement throughput that flows through the system being rated versus other systems that process large-value payments" (p. 5). This component addresses aspects of CP III through CP X. The fourth component basically focuses on the Central Bank's payment system oversight function. The 2008 report by Cirasino and Garcia concludes that China achieves a "medium-low level of development” (p. 23) for component one, and “medium-high levels of development” (p. 31 & p. 51) for component two and four. The report also indicates that the RTGS system accounts for over 75 percent of total values settled through the RTGS and check system combined. The report notes that China is reforming its legal and regulatory framework for payment systems, its large-value funds transfer system, and its securities settlement system. These reforms are aimed to improve the overall efficiency of the payment system, and provide better payment and settlement services for the market and end-users.

In its 2005 FSR, the PBC concludes that "China has put in place a fairly sound system of payment rules and regulations" (p. 123). The payment and settlement regime in China is rooted in several key laws and regulations, including the Law of the People's Republic of China on the People's Bank of China (PBC Law), the Law of the People's Republic of China on Commercial Banks (Law on Commercial Banks), the Securities Law of the People's Republic of China (Securities Law). Promulgated in 1995 and amended in 2003, the PBC Law stipulates that the PBC's responsibilities in payment systems are to "maintain the smooth operation of payment and settlement systems" and to "[formulate] regulations related to payment clearing and settlement, as well as for providing interbank settlement services" (EMEAP 2002, p. 64). The Law on Commercial Banks (1995) requires commercial banks to provide payment and settlement services for their customers on a timely basis. The 2008 World Bank report states that legal provisions in China cover clarity of timing of final settlement especially when there is an insolvency and legal recognition of (bilateral and multilateral) netting arrangements. However, the provisions do not cover other important issues, such as: (1) the non-existence of any zero hour or similar rules; (2) enforceability of security interests provided under collateral arrangements and of any relevant repo agreements; (3) recognition of electronic processing of payments; and (4) protection from third-party claims of securities and other collateral pledged in a payment system.

According to the 2002 Executive's Meeting of East Asia Pacific Central Banks and Monetary Authority (EMEAP) "Payment Systems in EMEAP Economies" report, one of the PBC's main objectives in creating CNAPS was to minimize credit and liquidity risks. For example, CNAPS allows its participants to check their expected positions in the book of the PBC as soon as possible, and it automatically reminds them of their balances. The responsibilities of the system operator (the PBC) are also enhanced under CNAPS. For instance, in addition to requiring collateral on daylight overdraft of direct participants, the PBC can limit the types of collateral it accepts. The PBC also monitors each participant's creditworthiness daily, and it reserves the right to terminate a participant's daylight overdraft ceiling.

The 2002 EMEAP report notes that CNAPS provides same day settlement. More specifically, CNAPS checks the balance of participants in the book of the PBC before debiting their settlement accounts. The EMEAP report concludes that "once the accounts are debited or credited, payments become final" (p. 77). Additionally, the 2005 FSR states that "each [CNAPS] transaction is completed real-time within one minute of entry" (p. 120). The PBC's 2005 FSR observes that "[CNAPS] participants use their deposit account at the PBC to complete settlement" and "the reliability of the settled capital is guaranteed" (pp. 121-22). In addition, the 2002 EMEAP report points out that "the PBC is responsible for managing required reserve accounts opened by financial institutions, and for supervising the opening and purpose of bank accounts" (p. 85). As reported in a 2009 China Daily news article, during 2008, according to the article, the LVPS system processed 214 million payments with a total value of 64 trillion yuan (9 trillion US dollars), an increase of 20 percent in value over the previous year. Meanwhile, the report notes that non-cash payment products, such as bank cards, have become more popular in China.

In its 2008 FSR, the PBC notes that "the payment system oversight targeting safety and efficiency was further institutionalized" (p. 78). Notable among these advances is China's improvement of its payment and settlement-related laws and regulations. For example, the PBC's revised the Administrative Rules on Payment and Clearing Organizations and Electronic Payment Guidelines (No. 2) introducing significant changes. According to the 2005 FSR, CNAPS "has given full consideration to security control problems in terms of hardware, software and management" (pp. 122, 129). The report also states that the PBC will "continue to improve the design, operation, maintenance and oversight mechanisms of [CNAPS] and optimize business processing procedures to make the payment system safer and more efficient" (pp. 122, 129). The 2008 FSR points out that the PBC plans to build an accounting data centralization system to facilitate the shift from the accounting style to the management style. This architecture is expected to assist the PBC in meeting its risk control and safety obligations within China's payment systems. The PBC plans to launch, at the same time, a foreign currency payment system "to ensure the efficiency and safety of inter-bank foreign currency payment and settlement" (p. 79).

The Principles

III. The system should have a well-founded legal basis under all relevant jurisdictions.

The 2008 assessment by Cirasino and Garcia observes that China exhibits a “medium-low level of development” (p. 23) in the assessment's legal and regulatory framework component for payment systems, which to some extent addresses this principle. The payment and settlement regime in China is rooted in several key laws and regulations, including the PBC Law, the Law on Commercial Banks, and the Securities Law. Other laws include the Negotiable Instruments Law, Administrative Rules on Payment and Clearing Organizations and Electronic Payment Guidelines (No. 2), the Rules on Bill Management, the Payment and Settlement Rules, and the Administrative Rules for RMB Bank Settlement Accounts. Promulgated in 1995 and amended in 2003, the PBC Law stipulates that the PBC's responsibilities in payment systems are to "maintain the smooth operation of payment and settlement systems" and to "[formulate] regulations related to payment clearing and settlement, as well as for providing interbank settlement services" (EMEAP 2002, p. 64). The Law on Commercial Banks (1995) requires commercial banks to provide payment and settlement services for their customers on a timely basis. In its 2005 FSR, the PBC concludes that "China has put in place a fairly sound system of payment rules and regulations" (p. 123). The 2008 World Bank report states that legal provisions in China cover clarity of timing of final settlement especially when there is an insolvency and legal recognition of (bilateral and multilateral) netting arrangements. However, the provisions do not cover other important issues such as: (1) the non-existence of any zero hour or similar rules; (2) enforceability of security interests provided under collateral arrangements and of any relevant repo agreements; (3) recognition of electronic processing of payments; and (4) protection from third-party claims of securities and other collateral pledged in a payment system.
In its 2008 FSR, the PBC observes that "in 2007, China's payment system progressed steadily, witnessing new developments in institutional building" (p. 77). The report also states that China improved its payment and settlement-related laws and regulations, noting, for example, that the PBC's revision of the Administrative Rules on Payment and Clearing Organizations and Electronic Payment Guidelines (No. 2) introduced significant changes. Furthermore, the PBC states in its 2005 FSR that "it has improved payment and settlement rules and regulations, providing legal guarantee to supervise the payment system" (p. 123). Despite the above information, none of the sources mentioned explicitly address China's compliance with this principle.

IIII. The system's rules and procedures should enable participants to have a clear understanding of the system’s impact on each of the financial risks they incur through participation in it.

The 2002 EMEAP report observes that the 1995 Bills Law of the People's Republic of China "defines the rights, obligations and legal responsibilities of different parties involved in bill transactions" (p. 64). The EMEAP report also notes the Regulations on Trading in the Interbank Bonds Market "define participants' qualification, types of transactions, custody and settlement for the interbank bonds market" (p. 64). The 2008 assessment by Cirasino and Garcia observes that China exhibits a “medium-low level of development” (p. 23) in the assessment's legal and regulatory framework component for payment systems, which to some extent addresses this principle. Nevertheless, the report does not explicitly assign a rating in regards to China's compliance with this principle.

IIIII. The system should have clearly defined procedures for the management of credit risks and liquidity risks, which specify the respective responsibilities of the system operator and the participants and which provide appropriate incentives to manage and contain those risks.

The 2008 assessment by Cirasino and Garcia observes that China exhibits a “medium-high level of development” (p. 31) in the assessment's large-value payment systems component. This component to some extent covers the requirements of this principle but does not address China's compliance with the requirements of Core Principle III as stipulated by the CPSS. According to the 2002 EMEAP report, one of the PBC's main objectives in creating CNAPS is to minimize credit and liquidity risks. For example, CNAPS allows its participants to check their expected positions in the book of the PBC as soon as possible, and it automatically reminds them of their balances. The responsibilities of the system operator (the PBC) are also enhanced under CNAPS. For instance, in addition to requiring collateral on daylight overdraft of direct participants, the PBC can limit the types of collateral it accepts. The PBC also monitors each participant's creditworthiness daily, and it reserves the right to terminate a participant's daylight overdraft ceiling.
In its 2005 FSR, the PBC states that, as a RTGS and bulk net settlement system, CNAPS offers improved risk control abilities. For example, the system minimizes clearing risks by fixing the operating time of the clearing window. As a result, should a payment instruction remain in the queue after the window is closed, it will be returned to the sending bank. Furthermore, CNAPS prevents credit risks by setting a reasonable daytime overdraft limit for commercial banks, thus requiring banks to provide adequate guarantees for high penalty loans. The 2008 FSR points out that, in May 2007, the PBC established a payment management information system, which collects CNAPS data and monitors its performance. Most importantly, this new program allows the PBC to forestall liquidity risks in the banking system and it helps CNAPS participants bolster their liquidity management. Lastly, the 2008 FSR states the PBC plans to build an accounting data centralization system to facilitate the shift from the accounting style to the management style. This architecture is expected to assist the PBC in meeting its risk control obligations within China's payment systems.
The 2008 World Bank report notes that sources of liquidity in the RTGS system are provided by: (1) opening balances and funds received from other participants during the day, (2) participants’ partial or entire reserve requirements balance during the day, and (3) lines of credit between banks. To control credit risk exposure in the system, the PBC requires high quality collateral in all cases. If a participant does not have enough balance (and/or credit) in its current account to process new payments, the payment order will go into a queue for later processing.

IIIV. The system should provide prompt final settlement on the day of value, preferably during the day and at a minimum at the end of the day. (Systems should seek to exceed the minima included in this Core Principle.)

The 2008 assessment by Cirasino and Garcia observes that China exhibits a “medium-high level of development” (p. 31) in the assessment's large-value payment systems component. This component to some extent covers the requirements of this principle but does not address China's compliance with the requirements of Core Principle IV as stipulated by the CPSS. According to the 2002 EMEAP report, CNAPS provides same day settlement. More specifically, CNAPS checks the balance of participants in the book of the PBC before debiting their settlement accounts. The EMEAP report concludes that "once the accounts are debited or credited, payments become final" (p. 77). Additionally, the 2005 FSR states that "each [CNAPS] transaction is completed in real-time within one minute of entry" (p. 120).

IIV. A system in which multilateral netting takes place should, at a minimum, be capable of ensuring the timely completion of daily settlements in the event of an inability to settle by the participant with the largest single settlement obligation. (Systems should seek to exceed the minima included in this Core Principle.)

The 2002 EMEAP report notes that multilateral netting (across accounts at the local PBC branch) does occur amongst China's Local Clearing Houses (LCHs), through which all local interbank payments and most intrabank payments are processed. According to the EMEAP report, "once the receivable members' accounts are credited, the settlement becomes final" (p. 72). Furthermore, the LCHs are capable of ensuring the timely completion of daily settlements in the event of an inability to settle by a participant. This is done by the PBC levying a penalty equal to a percentage of the insufficient amount against a participant that cannot find sufficient funds to cover its debit position during the settlement period. The rules stipulate that a participant gets overnight credit from the PBC if the debit position is not covered on the same day. Despite the above information, there are no sources publicly available that directly address China's compliance with this principle.

IIVI. Assets used for settlement should preferably be a claim on the central bank; where other assets are used, they should carry little or no credit risk and little or no liquidity risk.

While there is no information publicly available that explicitly addresses China's compliance with this principle, the PBC's 2005 FSR does observe that "[CNAPS] participants use their deposit account at the PBC to complete settlement" and "the reliability of the settled capital is guaranteed" (pp. 121-22). In addition, the 2002 EMEAP report points out that "the PBC is responsible for managing required reserve accounts opened by financial institutions, and for supervising the opening and purpose of bank accounts" (p. 85). Prospective payment system participants are required to open reserve accounts with the PBC, and these accounts may be used for settlement of interbank and intrabank funds transfer. The 2002 EMEAP report also notes CNAPS checks the balance of participants in the book of the PBC before debiting their settlement account, concluding that "once the accounts are debited or credited, payments become final" (p. 77). Furthermore, to manage credit and liquidity risks, CNAPS allows its participants to check their expected positions in the book of the PBC as soon as possible, and it automatically reminds them of their balances. The 2002 EMEAP report also notes that for China's Local Clearing Houses, through which all local interbank payments and most intrabank payments are processed, "settlement of multilateral net positions occurs across accounts at the local PBC branch (or, in some case, the designated commercial bank)" (p. 72).

IIVII. The system should ensure a high degree of security and operational reliability and should have contingency arrangements for timely completion of daily processing.

The 2008 assessment by Cirasino and Garcia observes that China exhibits a “medium-high level of development” (p. 31) in the assessment's large-value payment systems component. This component to some extent covers the requirements of this principle. The PBC Law stipulates the PBC must maintain the sound operation of payment, clearing and settlement systems. In addition, the 2002 EMEAP report observes that "by means of well-defined assistance programs, supporting teams, necessary hardware and communication facility, the PBC [aims] to enhance its disaster recovery capability for the CNAPS" (p. 86). The 2008 World Bank publication on payment systems worldwide indicates in its appendix that for China’s large value payment systems, routine procedures are in place for periodical data back-ups. Data storage media is kept in sites other than the main processing site and back-up servers have been deployed at the main processing site. Meanwhile, a fully equipped alternate processing site exists. The report also notes the business continuity arrangements are regularly tested.
In its 2008 FSR, the PBC notes that "the payment system oversight targeting "safety and efficiency" was further institutionalized" (p. 78). Notable among these advances is China's improvement of its payment and settlement-related laws and regulations. For example, the PBC's revision of the Administrative Rules on Payment and Clearing Organizations and Electronic Payment Guidelines (No. 2) made significant changes. According to the 2005 FSR, CNAPS "has given full consideration to security control problems in terms of hardware, software and management" (pp. 122, 129). The report also states that the PBC will "continue to improve the design, operation, maintenance and oversight mechanisms of [CNAPS] and optimize business processing procedures to make the payment system safer and more efficient" (pp. 122, 129). The 2008 FSR notes that the PBC plans to build an accounting data centralization system to facilitate the shift from the accounting style to the management style. This architecture is expected to assist the PBC in meeting its risk control and safety obligations within China's payment systems. The PBC plans to launch, at the same time, a foreign currency payment system "to ensure the efficiency and safety of inter-bank foreign currency payment and settlement" (p. 79). In its 2004 Settlement Systems of East Asian Economies report, the Ministry of Finance of Japan notes CNAPS has its host computer at the National Processing Center (NPC) in Beijing and a backup center in Wuxi City, Jiangsu Province. The NPC and PBC branches, and the NPC and the backup center, are connected via satellite (SINOSAT), with landlines used as a backup. Despite the above descriptive information, none of the sources mentioned explicitly address China's compliance with this principle.

IIVIII. The system should provide a means of making payments which is practical for its users and efficient for the economy.

In its 2008 FSR, the PBC notes that "the payment system oversight targeting safety and efficiency was further institutionalized" (p. 78). Notable among these advances is China's improvement of its payment and settlement-related laws and regulations. According to the 2005 FSR, the PBC, in accordance with the Core Principles for Systemically Important Payment Systems, will "continue to improve the design, operation, maintenance and oversight mechanisms of [CNAPS] and optimize business processing procedures to make the payment system safer and more efficient" (pp. 122, 129). The 2008 FSR notes that the PBC plans to launch a foreign currency payment system "to ensure the efficiency and safety of inter-bank foreign currency payment and settlement" (p. 79). The 2008 assessment by Cirasino and Garcia observes that China exhibits a “medium-high level of development” (p. 31) in the assessment's large-value payment systems component. This component to some extent covers the requirements of this principle. The 2008 World Bank publication on payment systems worldwide indicates in its appendix that charges of the RTGS system aim at partial recovery of operational cost. Despite the above descriptive information, none of the sources mentioned explicitly address China's compliance with this principle.

IIIX. The system should have objective and publicly disclosed criteria for participation, which permit fair and open access.

The PBC states in its 2005 FSR that "CNAPS has an open standard for access" adding that "all eligible small and medium-sized financial institutions can become direct participants and get connected to the system to handle their payments" (p. 122). According to the 2002 EMEAP report, all institutions that open settlement accounts with PBC branches may participate in CNAPS directly, and some institutions approved by the PBC to engage in a given business may become concessionary participants. Direct participants include bank's branches in cities and credit unions. The EMEAP report also notes that "most of bank's branches within service area of a LCH are direct participants" and that "depending upon LCH's organizational structure, those small local branches belonging to the same bank may qualify to be direct members" (p. 72). The 2008 assessment by Cirasino and Garcia observes that China exhibits a “medium-high level of development” (p. 31) in the assessment's large-value payment systems component. This component to some extent covers the requirements of this principle. According to the appendix of the 2008 World Bank publication on payment systems worldwide, there is an explicit access/exclusion policy for payment systems in China; access is granted on the basis of institutional standing and the fulfillment of a set of objective criteria; and formal rules exist to allow the operator to exclude a participant in a timely manner. Nevertheless none of the publicly available sources explicitly address China's compliance with this principle.

IIX. The system's governance arrangements should be effective, accountable and transparent.

Promulgated in 1995 and amended in 2003, the PBC Law stipulates that the PBC's responsibilities in payment systems are to "maintain the smooth operation of payment and settlement systems" and to "[formulate] regulations related to payment clearing and settlement" (EMEAP 2002, p. 64). Therefore, under the PBC Law, according to the 2002 EMEAP report, the PBC "has the rights [sic] to supervise, manage and provide guidelines to financial institutions doing banking business, and may monitor payment services provided by financial institutions by on-site auditing and analysis of their regular reports" (p. 86). However, according to the PBC's 2005 FSR, "oversight responsibilities have yet to be clarified and coordination between different government agencies needs to be strengthened (p. 127). The 2008 assessment by Cirasino and Garcia observes that China exhibits a “medium-high level of development” (p. 31) in the assessment's large-value payment systems component. This component to some extent covers the requirements of this principle. Nevertheless, the above information does not explicitly address China's compliance with this principle.

ENA. The central bank should define clearly its payment system objectives and should disclose publicly its role and major policies with respect to systemically important payment systems.

The PBC Law clearly stipulates that the PBC's objectives in payment systems are to "maintain the smooth operation of payment and settlement systems" and to "[formulate] regulations related to payment clearing and settlement, as well as for providing interbank settlement services" (EMEAP 2002, p. 64). The PBC Law is published on the PBC website. The 2002 EMEAP report notes that "the PBC is the sole owner and operator of CNAPS due to its systemic importance" (p. 76). The 2008 World Bank report notes that the PBC’s payment system oversight powers are provided by law, and performed regularly on an on-going basis. There is a specific unit within the central bank responsible for payment system oversight. The 2008 assessment by Cirasino and Garcia observes that China exhibits a "medium-high level of development" (p. 51) with the assessment's payment system oversight component. This component to some extent covers the requirements of this principle.

IIB. The central bank should ensure that the systems it operates comply with the Core Principles.

There is insufficient information publicly available as to China's compliance with this principle. However, under the PBC Law, the PBC "has the rights [sic] to supervise, manage and provide guidelines to financial institutions doing banking business, and may monitor payment services provided by financial institutions by on-site auditing and analysis of their regular reports" (EMEAP 2002, p. 86). Nevertheless, according to the 2008 FSR, the PBC must improve and strengthen its oversight of China's payment and settlement systems. The PBC plans to "urge banking financial institutions to improve risk management, and effectively supervise and evaluate payment risks aided by the analysis of payment information" (p. 80). There is no subsequent information publicly available as to whether these measures have come to pass. The 2008 World Bank report notes that the PBC’s payment system oversight is performed over all central bank-operated systems, as well as all relevant commercial bank-operated systems in the country. The 2008 assessment by Cirasino and Garcia observes that China exhibits a "medium-high level of development" (p. 51) with the assessment's payment system oversight component. This component to some extent covers the requirements of this principle. Nonetheless, the report does not provide enough information as to gauge China's compliance with this principle.

IIC. The central bank should oversee compliance with the Core Principles by systems it does not operate and it should have the ability to carry out this oversight.

Despite there being insufficient information publicly available as to China's compliance with this principle, the PBC Law does stipulate that the PBC's responsibilities in payment systems are to "maintain the smooth operation of payment and settlement systems" and to "[formulate] regulations related to payment clearing and settlement, as well as for providing interbank settlement services" (EMEAP 2002, p. 64). However, in delineating the responsibilities of the PBC over payment systems operating in China, the PBC Law does not differentiate between PBC-operated payment systems and non PBC-operated ones. Nevertheless, the 2008 PBC FSR recommends that the PBC "continue to improve intra-bank payment systems run by banking financial institutions," having observed that "payment system quality varies greatly among banking financial institutions" (p. 79). The 2008 World Bank report notes that the PBC’s payment system oversight is performed over all central bank-operated systems, as well as all relevant commercial bank-operated systems in the country. The 2008 assessment by Cirasino and Garcia observes that China exhibits a "medium-high level of development" (p. 51) with the assessment's payment system oversight component. This component to some extent covers the requirements of this principle. Nonetheless, the report does not provide enough information as to gauge China's compliance with this principle.

IID. The central bank, in promoting payment system safety and efficiency through the Core Principles, should cooperate with other central banks and with any other relevant domestic or foreign authorities.

There is insufficient information publicly available as to China's compliance with this Principle. The 2002 EMEAP report does however observe that "the PBC closely cooperates with other entities in China's financial sector, coordinating on organizational and technical issues concerning payments system" (p. 86). The 2008 World Bank publication mentions that cooperation between the central bank and other relevant authorities is ensured through a formal mechanism, such as a memorandum of understanding or is required by law. The cooperation usually includes regular meetings and exchange of opinions and views.