China Banking Regulatory Commission (CBRC) Chairman Liu Mingkang endorsed Basel II's guidelines for risk management, as set out by the so-called Basel Committee of the Bank for International Settlements, and said China's big banks should follow them. Among other things, Basel II departs from requiring uniform cash reserves, or capital adequacy ratios, that banks hold to cover risk and instead prescribes different ratios according to different levels of risk lenders take and the quality of risk management systems they have in place. Liu said that if the Bank of China, China Construction Bank and the Industrial & Commercial Bank of China demonstrated they could meet Basel II standards, "the objective of transforming state-owned banks into shareholding commercial banks with international competitiveness can be considered broadly achieved."
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