After the founding of the PRC, the People's Bank of China exercised the functions and powers of the central bank, at the same time handling industrial and commercial loans and savings. Therefore, it was neither a real central bank nor a commercial bank in conformity with the laws of the market. Since 1978, China has carried out a series of major reforms in its banking system and invigorated the opening to the outside world, in the process allowing finance to develop steadily. In 1999, the total amount of RMB deposits of all the banking institutions had reached 10.9 trillion yuan, and the total amount of credits was 9.4 trillion yuan, 96 times and 53 times the figures for 1978, respectively. China has basically formed a new financial system regulated, controlled and supervised by the central bank, with national banks providing the main body, and policy management separated from commercial business. Many different kinds of banking organizations coexist, rationally coordinating the division of responsibility. The new banking system has played an active role in curbing inflation and promoting economic development. Since 1984, the People's Bank of China no longer handles loans and savings, but formally acts as a central bank to exercise macro-control and supervision over the nation's banking business, achieving remarkable success. In 1994, the Industrial and Commercil Bank of China, Bank of China, Agricultural Bank of China and Construction Bank of China were transformed into national commercial banks; meanwhile, three policy banks were established: the China Agricultural Development Bank, National Development Bank and China Import and Export Bank. The Commercial Banks Law, issued in 1995, not only provides the conditions for constructing a new commercial bank system and organization, but also offers legal ways for the national specialized banks to be transformed into commercial banks. Since 1996, a number of stock commercial banks have been set up, the number of financial institutions have increased rapidly, and banking businesses have become diversified, and banking services have become an indispensable part of society. After the eruption of the financial crisis in the capitalist countries of Asia in 1997, in order to prevent and eliminate financial risks, the People's Bank of China established a management system in 1998 to conduct independent management and supervision over the banking, securities and insurance sectors, cancelled provincial-level branches and offices at or below the prefecture and city levels, and established nine trans-provincial (autonomous regional and municipal) branches.

Over the past 21 years, China has steadily broadened its finance sector. A group of foreign-capital and Sino-foreign joint-venture financial organizations have been established in the special economic zones and coastal open cities as well as in major inland cities, and the right to do RMB business has been given to some foreign-invested banks. The Chinese government has decided to enlarge the regions where foreign-invested banks may establish business operation organizations from the present 23 cities and Hainan Province to all major cities. By the end of 1999, a total of 177 commercial foreign financial organizations and 248 agencies of foreign banks had been set up in China. China's commercial banks have also set up branches abroad to develop international credit business. Among them, the Bank of China has the most and biggest branches. In 1980, China resumed its membership of the World Bank, and returned to the International Monetary Fund. In 1984, it established business relations with the Bank for International Settlements. In 1985, China formally joined the African Development Bank, and in 1986 officially became a member of the Asian Development Bank.