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Law of the People's Republic of China on the People's Bank of China

Contents
Chapter I General Provisions
Chapter II Organization
Chapter III Renminbi
Chapter IV Business Operation
Chapter V Supervision and Control over the Banking Industry
Chapter VI Finance and Accounting
Chapter VII Legal Liabilities
Chapter VIII Supplementary Provisions

Chapter I General Provisions

Article 1 This Law is hereby formulated for the purpose of establishing the status of the People's Bank of China (PBC), clarifying its functions, ensuring the correct enactment and implementation of the state monetary policies, and establishing and perfecting a macro-control system through the central bank, as well as maintaining the stability of banking industry.

Article 2 The PBC is the central bank of the People''s Republic of China.
As the central bank, the PBC shall formulate and implement monetary policies, prevent and dissolve financial risks, and maintain the stability of banking industry in the country under the leadership of the State Council.

Article 3 The aim of monetary policies is to maintain the stability of the value of currency and thereby promote economic growth.

Article 4 The PBC shall perform the following functions:
1. Promulgating and implementing orders and regulations in relation to its functions;
2. Formulating and implementing monetary policies in accordance with the law;
3. Issuing Renminbi (RMB) and control its circulation;
4. Supervising the inter-bank borrowing or lending market and
inter-bank bonds markets;
5. Administering foreign exchange, and supervising inter-bank
foreign exchange market;
6. Supervising gold market;
7. Holding, controlling and managing the state foreign exchange
reserve and gold reserve;
8. Managing the state treasury;
9. Maintaining the normal operation of the systems for payments and
settlements of accounts;
10. Directing and disposing the anti-money-laundering work of the
financial industry, being responsible for capital supervision and
measurement over anti-money-laundering;
11. Being responsible for the statistics, investigation, analysis,
and forecasting of the financial industry;
12. Undertaking the relevant international banking operations as the
central bank of the state; and
13. Other functions assigned to it by the State Council.
In order to implement monetary policies, the PBC may carry out
financial operations in accordance with the relevant provisions of
Chapter IV of this Law.
Article 5 The PBC shall report to the State Council its decisions
concerning the annual supply of currency, interest rates, foreign
exchange rates, and other major issues specified by the State
Council for approval before implementation.
The PBC shall, after making decisions on matters concerning monetary
policies other than those as specified in the preceding paragraph,
carry them out immediately, and then report them to and put them on
record at the State Council.
Article 6 The PBC shall submit to the Standing Committee of the
National People''s Congress a report on monetary policies and the
operation of the financial industry.
Article 7 The PBC shall, under the guidance of the State Council,
independently implement monetary policies, perform its functions and
carry out its operations according to law free from any intervention
of local governments, departments of governments at all levels,
public organizations or individuals.
Article 8 All capital of the PBC shall be allocated by the state and
owned by the state.
Article 9 The State Council shall establish a financial supervision
and administration coordination mechanism, and shall formulate the
specific measures for it.
Chapter II Organization
Article 10 The PBC shall have one governor and a certain number of
deputy governors.
The governor of PBC shall be nominated by the Premier of the State
Council, and affirmed by the National People''s Congress for the
post. Whereas the National People''s Congress is not in session, he
or she shall be affirmed by the Standing Committee of the National
People''s Congress and appointed or removed by the president of the
People''s Republic of China for the post. The deputy governors of
the PBC shall be appointed or removed by the Premier of the State
Council.
Article 11 The PBC shall institute a system in which the governor
assumes the full responsibility. The governor shall direct the work
of the PBC and the deputy governors shall assist the governor in his
or her work.
Article 12 The PBC shall establish a monetary policy committee whose
functions, composition and working procedures shall be prescribed by
the State Council and reported to and put on records at the Standing
Committee of the National People''s Congress.
The monetary policy committee of the PBC shall play an important
role in the state macro-control, and in the formulation and
adjustment of monetary policies.
Article 13 The PBC shall, upon the need of performing its functions,
establish branches as its representative organs, and exercise
centralized and unified leadership and control over these branches.
The branches of the PBC shall, upon the authorization of the PBC, be
responsible for maintaining the stability of financial industry and
handling the relevant business operations in the areas under their
respective jurisdictions.
Article 14 The governor, deputy governors and other staff of the PBC
shall be diligent in performing their functions, and may not abuse
their power and conduct malpractice for gaining private interests,
or hold posts concurrently in any other banking institution,
enterprise or foundation.
Article 15 The governor, deputy governors and other staff of the PBC
shall keep state secrets according to law and have the duty to keep
secrets of the banking institutions and the clients in relation to
their performance of functions.
Chapter III Renminbi
Article 16 The legal tender of the PBC is Renminbi (RMB). Renminbi
shall be used for repaying all public or private debts according to
its face value within the territory of the People''s Republic of
China, and no organization or individual may refuse to accept.
Article 17 The basic unit of Renminbi is Yuan and the units of
fractional currency of Renminbi are Jiao and Fen.
Article 18 Renminbi shall be printed, minted and issued uniformly by
the PBC.
When issuing new Renminbi, the PBC shall make a public announcement
of the issuing date, face values, designs, patterns and
specifications of the new.
Article 19 Any counterfeiting, altering or illegal printing or
minting of the Renminbi is prohibited. Any selling or buying of the
counterfeit or altered Renminbi is prohibited. Transportation,
possession or use of the counterfeit, altered or illegally printed
or minted Renminbi is prohibited. Deliberate damaging of Renminbi is
prohibited. Illegal use of the design of Renminbi in propaganda
materials, publications or other commodities is prohibited.
Article 20 No entity or individual may print or issue promissory
notes as substitutes for Renminbi to circulate on the open market.
Article 21 The damaged or soiled Renminbi shall be exchanged in
accordance with the regulations of the PBC, and the PBC shall be
responsible for collecting and destroying the aforesaid Renminbi.
Article 22 The PBC shall establish a Renminbi issuing treasury, and
its branches shall establish subsidiary issuing treasuries. The
subsidiary issuing treasuries shall, in allocating Renminbi issuing
funds, act on the order of allocation from their superior treasury.
No entity or individual may use the issuing fund in violation of the
relevant regulations.
Chapter IV Business Operations
Article 23 The PBC may use the following instruments to implement
the monetary policies:
1. Demanding that the banking institutions deposit the reserve fund
at a required ratio;
2. Fixing the base interest rates of the central bank;
3. Handling rediscounting for the banking institutions, which have
opened accounts in the PBC;
4. Providing loans for commercial banks;
5. Dealing in treasury bonds, other government bonds, financial
bonds and foreign exchange on the open market; and
6. Other monetary policy instruments as determined by the State
Council.
The PBC may work out the specific conditions and procedures when
applying the monetary policy instruments set forth in the preceding
clauses to implement monetary policies.
Article 24 The PBC shall manage the state treasury in accordance
with laws and administrative regulations.
Article 25 The PBC may issue and exchange treasury bonds and other
government bonds to financial institutions on behalf of the
financial departments of the State Council.
Article 26 The PBC may open accounts for banking institutions as
needed, but may not overdraw the accounts of the banking
institutions.
Article 27 The PBC shall organize or assist in organizing banking
institutions in settling inter-institutional accounts, coordinate
the activities and provide services thereof. The PBC shall set down
specific procedures for such operation.
The PBC shall formulate rules for settlement of payment together
with the banking regulatory organs of the State Council.
Article 28 The PBC may, for the implementation of monetary policies,
determine the amounts, repayment schedules, rates of interest and
modes of loans to commercial banks, but the time limit for such
loans shall not exceed one year.
Article 29 The people''s bank is prohibited from overdrawing the
financial budget of the government or from directly subscribing to
or acting as sole sales agent for treasury bonds and other
government bonds.
Article 30 The PBC is prohibited from providing loans for the local
governments or departments of governments at all levels, non-bank
financial institutions and other entities or individuals, and may
provide loans for non-bank financial institutions specially
permitted by the State Council.
The PBC shall not act as financial guarantor for any entity or
individual.
Chapter V Supervision and Control over the Banking Industry
Article 31 The PBC shall make supervision and inspection over the
operation of financial market, and implement macro-control on
financial market, so as to promote its harmonious development.
Article 32 The PBC shall have the right to make inspection and
supervision over the following acts of the financial institutions,
other entities or individuals:
1. Acts of implementing the relevant provisions on the management of
reserve against deposit;
2. Acts in relation to the special loans of the PBC;
3. Acts of implementing the provisions on Renminbi management;
4. Acts of implementing the relevant provisions on the management of
the inter-bank borrowing or lending market and the inter-bank bonds
markets;
5. Acts of implementing the relevant provisions on foreign exchange
control;
6. Acts of implementing the relevant provisions on gold management;
7. Acts on behalf of the PBC of managing the state treasury;
8. Acts of implementing the relevant provisions on settlement
management; and
9. Acts of implementing the relevant provisions on
anti-money-laundering.
The special loans as mentioned in the preceding paragraph, refer to
the loans used for special purpose, which are determined by the
State Council and issued to financial institutions by the PBC.
Article 33 The PBC may, for implementing the monetary policy and
maintaining the stability of the finance, suggest that the banking
regulatory organ of the State Council make inspection and
supervision over banking institutions. And the banking regulatory
organ of the State Council shall give a reply within 30 days upon
receiving the suggestion.
Article 34 Where a banking institution has difficulty in payment,
which may give rise to financial risks, the PBC may, upon the
approval of the State Council, have the right to make inspection and
supervision over the banking institution to maintain financial
stability.
Article 35 The PBC may, for performing its functions, have the right
to require the banking institutions to submit the necessary balance
sheet, statements of profit and other finance and accounting reports
and materials.
The PBC shall, together with the banking regulatory organ of the
State Council, and other financial supervision and administration
organs of the State Council, establish the supervision and
administration information sharing mechanism.
Article 36 The PBC shall be responsible for compiling comprehensive
statistics and accounting statements for the national banking system
and publishing them in accordance with the relevant provisions of
the state.
Article 37 The PBC shall establish and perfect auditing and checking
systems for and strengthen its control over the banking system.
Chapter VI Finance and Accounting
Article 38 The PBC shall exercise independent control over its
financial budget.
The budget of the PBC shall be included in the central budget after
it has been examined and verified by the financial departments of
the State Council, and shall be supervised by the financial
departments of the State Council for the purpose of implementing the
budget.
Article 39 The PBC shall turn in all of its net profit to the state
treasury from its income of every fiscal year minus annual
expenditures after withdrawing its general reserve funds at a
proportion determined by the financial department of the State
Council.
Losses of the PBC shall be setoff by allocations of the central
finance.
Article 40 The PBC shall manage its revenues and expenditures and
accounting affairs in accordance with laws, administrative
regulations, and the uniform financial and accounting systems of the
state, and shall be subject to the respective auditing and
supervision of the audit organs and the financial departments of the
State Council in accordance with the law.
Article 41 The PBC shall, within 3 months after the end of each
fiscal year, complete the compiling of balance sheets, statement of
profit and loss and the relevant finance and accounting report
forms, prepare its annual report and publish them in accordance with
the relevant state regulations.
The fiscal year of the PBC shall begin from January 1 to December 31
of the Gregorian calendar.
Chapter VII Legal Liabilities
Article 42 Anyone who illegally prints or mints Renminbi, sells
counterfeit or illegally printed or minted Renminbi, or knowingly
transports counterfeit money or illegally printed or minted money,
which constitutes a crime, shall be prosecuted for criminal
liabilities according to law. If the circumstances are not serious
enough to constitute a crime, he shall be punished by the public
security organs with a detention of no more than 15 days and a fine
of no more than RMB 10,000 Yuan.
Article 43 Anyone who buys counterfeit or altered Renminbi or
knowingly holds or uses counterfeit or altered or illegally printed
or minted Renminbi, which constitutes a crime, shall be prosecuted
for criminal liabilities. If the circumstances are not serious
enough to constitute a crime, he shall be punished by the public
security organs with a detention of no more than 15 days and a fine
of no more than RMB 10,000 Yuan.
Article 44 In the case that anyone illegally uses the design of
Renminbi in propaganda materials, publications or other commodities,
the PBC shall order him to make corrections and destroy the
illegally used design of Renminbi, confiscate any illegal gains and
impose a fine of no more than RMB 50,000 Yuan.
Article 45 If anyone prints or sells promissory notes as substitutes
for Renminbi for circulation on the open market, the PBC shall order
him to cease the illegal practice and impose on him a fine of no
more than RMB 200,000 Yuan.
Article 46 If any act listed in Article 32 of this Law is in
violation of the relevant provisions, penalties shall be imposed
according to the provisions on punishment in the relevant laws and
administrative regulations if any. If there isn''t any provision on
punishment, the PBC shall, in accordance with the different
circumstances, give warnings, confiscate illegal gains if any, and
impose a fine of one time up to five times of the illegal gains in
case the illegal gains are more than RMB 500,000 Yuan; and impose a
fine of RMB 500,000 Yuan up to RMB 2 million Yuan if there are no
illegal gains or the illegal gains are less than RMB 500,000 Yuan.
The directors and senior management personnel directly responsible
and other persons directly liable shall be given a warning, or
imposed upon a fine of RMB 50,000 Yuan up to RMB 500,000 Yuan. In
case a crime is constituted, the criminal liability shall be
prosecuted for according to law.
Article 47 In case a party refuses to accept the decisions on
administrative penalties, he may institute an administrative action in accordance with the "Administrative Procedures Law of the People's Republic of China".

Article 48 If the PBC commits any of the following acts, the person directly in charge and other persons directly liable shall be subject to administrative punishment. If a crime is constituted, he shall be prosecuted for criminal liabilities:
1. Providing loans in violation of the provisions of paragraph one of Article 30 of this Law;
2. Acting as a guarantor to entities or individuals; and
3. Using the currency issuing fund without authorization.
In case of any one of the acts as prescribed in the preceding clause, which causes losses, the person directly in charge and other persons directly liable shall bear part or all of the liabilities for compensation.

Article 49 Where the local governments, the departments of the governments at all levels, public organizations or individuals coerce the PBC and its functionaries into providing loans or guarantee in violation of Article 30 of this Law, the person directly in charge and other persons directly liable shall be subject to administrative punishments in accordance with the law. If a crime is constituted, the criminal liabilities of the relevant persons shall be prosecuted for according to law, and they shall bear part or all of the liabilities for compensation for any losses.

Article 50 If any functionary of PBC divulges any state or commercial secret he acquires, which is serious enough to constitute a crime, he shall be prosecuted for criminal liabilities according to law. If the circumstances are not serious enough to constitute a crime, he shall be subject to administrative punishments according to law.

Article 51 If any functionary of the PBC commits embezzlement, bribery, malpractices for personal gains, abuse of powers, or neglect of duties, which constitutes a crime, he shall be prosecuted
for criminal liabilities according to law. If the circumstances are not serious enough to constitute a crime, he shall be subject to administrative punishments according to law.

Chapter VIII Supplementary Provisions

Article 52 The banking institutions as mentioned in this Law, refer to the commercial banks, urban credit cooperatives, rural credit cooperatives, and other financial institutions and policy banks
absorbing public deposits.
The provisions of this Law on banking institutions shall be applicable to the financial capital management companies, trust and investment companies, finance companies, and financial leasing companies, which are established within the territory of China, and other financial institutions established upon the approval of the banking regulatory organ of the State Council.

Article 53 The present Law shall be implemented as of its promulgation.