ABSTRACT
During the era of boiling competition, both commercial banks’ ability to adjust themselves to meet the requirements of the changing environment and to what extent they can manage to do so mostly depend on the business running pattern they choose. The business running pattern of syncretism of local and foreign currencies is playing an increasing important role in the reform of state-owned commercial banks, because it to a great degree helps to materialize the reform of state-owned commercial banks. As the resource of foreign exchange fund is increasing continuously, we need to improve our abilities of capital operation and risk control. Going with the further development of China’s reform in foreign exchange system, especially after the innovation in formative mechanism of RMB in 2005, the floating elasticity of RMB will be enhanced, in addition, the total amount of foreign exchange and the decision differences of holding currency structure will directly affect the commercial banks’ running benefit. Therefore, only that we set up effective management system of syncretism of local and foreign currencies, restructuring the foreign exchange business process, we are able to be seasoned with the changes and developments of the market and keep away the risks hailing from the foreign exchange market.
In recent years, although china’s commercial banks have implemented the syncretism of local and foreign currencies strategy in different ways based on their own situations, which somehow resolved the administrant problem, most banks didn’t break out the traditional thinking ways in designing the department structure and plotting out the functions of them. The choice of management pattern, consolidation of business process and risk control may not be well-pleasing and operational effectiveness of the foreign exchange fund was restricted to them.
Going with the innovation in formative mechanism of RMB, fluctuation of RMB value will be more frequent and floating amplitude will be larger. At the same time, the pressure of RMB appreciation make the banks face with greater foreign exchange risks. China’s state-owned commercial banks come across many new problems and contradiction they never met before. As the state-owned commercial banks are running business in a complicated and changing environment, they must get ready for greater pressure and challenges in liquidity management, ability to control risks and creation of operational profits. In the face of new changes in economic and financial movement of the state and the influence of adjustment of the state’s foreign exchange policy, it is high time for commercial banks to consider how to restructure the traditional business running pattern. Only if we speed up the pace of transformation of operation strategy, commercial banks can obtain the space for living and developing in this changing era.
This article aims at discussing the issue related to the choice and application of the business running pattern of syncretism of local and foreign currencies on the basis of the influence of the adjustment of state foreign exchange rate policy to commercial banks. Moreover, the demonstration analysis of Agricultural Bank of China’s reform in syncretism of local and foreign currencies strategy further emphasize the importance of implementation of syncretism of local and foreign currencies strategy to the reform of the commercial banks and the far-reaching significance of utilization of this kind of business running pattern.
Key words: state-owned commercial bank, syncretism of local and foreign currencies, foreign exchange rate policy, business administration pattern.
