ABSTRACT
The financial system before reform was characterized by the all-inclusive mono-bank system established in 1950, based on the Soviet Gosbank system. The Chinese financial system was originally designed to serve the planning process rather than to perform the functions of a traditional financial system. Prior to 1978, the People’s Bank of China (PBC) served as both a central bank and a commercial bank, controlling about 93 percent of the total financial assets of the country and handling most financial transactions in the economy.3 The function of the banking system was confined to facilitating the financing of the economic plan. The PBC acted mainly as cashiers, with its functions confined to issue currency and credit, and carrying out the settlements of state-owned enterprises transactions.
