The Rise of China And Its Positive Impact On the Trend In World Politics - Essay Example

This essay stresses that the global economic framework that exists with 5the principle function of financial supervision was created in 1974 by the G7 nations in which China is a partisan member. The framework is the Basel Committee on Banking Supervision (BCBS) China is able to contribute positively to the trends in world politics through the observation of the various governing rules and standards that dictate its engagement with institutional bodies and other key industrial players. Voluntary standards imposed on minimum capital rules derived from banks aim to correct challenges ND problems of high leveraged loans instabilities occurring in transnational markets between banks, competitive inequality problems and “race to the bottom” regulatory.

This paper makes a conclusion that China has been seen to adopt the Badel Capital Adequacy Accord that is referred to as Basel 1. The G10 countries decide to adopt the principle that required the member states of which China is inclusive to have an 8% holding capital that was measurable of their overall risk-weighted assets. Big global banks challenged the Basel 1 framework and sort for an internal risk model that was going to facilitate the competition that existed among the global industrial players.

It therefore led to the formation of a reviewed framework Basel 2 that defined the mechanisms of market self-regulations. However, the new regulation only favored the high economic powe4rs and the developed countries gained less from the rule.