Foreword: The birth of a good article requires you to constantly collect data and sort out ideas. This website has collected a wealth of model articles on policy risks of financial institutions for you, which are only for reference. Welcome to read and collect them.
Part 1: Model Articles on Policy Risks of Financial Institutions
Key words: financial risk; Prevention mechanism; discuss
1、 Concept and main types of financial risks
Financial risk refers to various economies, including financial institution Including the possibility of loss due to the uncertainty changes of market economy factors or financial factors in financial or investment activities. According to its concept, the Section divides financial risks into: credit risk, interest rate risk, exchange rate risk, security price risk, liquidity risk, inflation risk, etc.
2、 Causes and characteristics of financial risks
The prevention of financial risks can be said to be an old topic. However, because of the importance of finance in the development of people's livelihood and even in social development, how to prevent financial risks in the new situation and the rapidly changing economic environment has become a new topic at the moment. In different policy Finance under the guidelines risk It is quite different. Similarly, the causes of risks are also different.
China is in the stage of rapid economic development. The rapidly developing economy has brought an indelible effect on social development and the enhancement of national strength. However, opportunities and risks coexist. The uncertainty of financial activities is also the fundamental reason for the existence of financial wind. Enterprises have their own decisions in financial activities, but at present, most industries in China have surplus productivity. About 30% of the commodity supply and demand in the market are balanced, and enterprises are in a state of commodity surplus. This makes it particularly difficult for enterprises to invest in the process, which leads to increasingly obvious financial risks.
The negative impact of financial risks mainly refers to the impact of micro entities and the impact on economic operation. The impact on micro entities mainly refers to the impact on local financial institutions, local governments at all levels, and some local enterprises and individuals. However, the impact on economic operation will not only make financial risks and financial risks transform into each other, make local financial risks transform outward, have a certain impact on national life, but also make economic order disorder, which is not conducive to the development of local economy.
With regard to the characteristics of China's current development, China's financial risks mainly have the following three characteristics:
1. Concealment
All kinds of financial risks in China are often hidden in financial activities and investment behavior in various forms.
2. Concentration
Financial risks are mainly concentrated in banks, because the financing channels of Chinese enterprises are mainly concentrated in banks.
3. Social
The country is in the stage of reform, and its economic policies are also undergoing the transformation from the old system to the new system. However, the financial knowledge of the masses is not enough. Although the financial awareness has been greatly enhanced, the risk awareness is still very weak. People's desire to seek speculative ways to get rich overnight is rampant. In this way, once the risk breaks out, it will cause panic among the masses, which is not conducive to social stability, harmonious society, and in turn will hinder the progress of reform.
3、 Main problems of financial risks in China
1. Local governments intervene too much in financial institutions
The management of financial institutions mostly follows economic laws and management strategies, and has its own rules of rise and fall. However, many local governments have implemented some unnecessary interventions on financial institutions. Of course, it is better to rely solely on economic laws for operation than to apply artificial macro-control of national policies to a certain extent to effectively avoid risks and accelerate development. However, many local governments intervene in financial institutions to solve the fiscal deficit of local governments at all levels, which brings additional risks to financial institutions. The most direct intervention is that the government appoints the main leaders of financial institutions, or the government intervenes in the decision-making of the main leaders on management affairs. In this way, the self management of financial institutions has become an empty shelf and a tool for the government to conduct economic behavior.
2. The corresponding financial supervision system is not perfect
From local branches of the CBRC to the People's Bank of China and then to the Agricultural Bank of China, no matter how to adjust the supervision subject, it is very easy to lead to a vacuum of rights in financial supervision. Second, from the central regulatory authority to the local regulatory authority, they have not been able to clarify their respective responsibilities, resulting in a series of problems in the current regulatory work in many places. Third, fraud and deception frequently occur, which makes financial supervision unfair and insufficiently convincing.
3. Defects of financial institutions
The weakness of financial institutions is the source of financial risks. First of all, the legal person structure of financial institutions in China is not scientific in setting, which means that financial institutions are not clear about property rights, and risks can be seen; Second, financial institutions have a huge burden, because of the national regulation in China's policies, local governments take this opportunity to participate in the management and supervision of financial institutions. In many cases, it is used to solve the local government's own fiscal deficit. Therefore, financial institutions have a huge pressure and burden. In this case, The management of financial institutions has produced a series of problems. Third, some financial institutions lack their own strength, and there is a greater possibility of bank run risk in the fierce market competition. The failure to effectively improve their own strength has greatly increased the probability of financial risks.
4、 The Construction of China's Financial Risk Prevention Mechanism
Financial risk prevention mainly includes macro financial risk prevention and micro financial risk prevention. Micro financial risk prevention mainly includes the operation and management of individuals and enterprises, with the main purpose of reducing or avoiding the possible losses of enterprises and financial institutions. The main purpose of macro financial risk prevention mechanism is to prevent financial crisis and put economic development in a more stable financial environment.
Compared with the macro financial risk prevention mechanism, the micro financial risk prevention pays more attention to individuals in the entire operating mechanism. This article mainly focuses on how the state can evade and manage financial risks in terms of macro policies. Therefore, this article focuses on the prevention mechanism of macro financial risks.
The main control object of macro financial risk prevention is to manage all participants in the market. The main methods are as follows:
Part 2: Model Articles on Policy Risks of Financial Institutions
As an important member of the G20, China is striving to strengthen and improve macro prudential management. The Proposal of the Central Committee of the Communist Party of China on Formulating the Twelfth Five Year Plan for National Economic and Social Development clearly proposed that we should build a counter cyclical financial macro prudential management system framework. This is a major arrangement made by the Central Committee on the basis of in-depth analysis of the lessons of the international financial crisis, in-depth summary of domestic practical experience, and accurate grasp of the direction of financial reform. The Central Economic Work Conference also made arrangements for strengthening macro prudential management. The implementation of the relevant spirit and requirements of the central government on promoting financial macro prudential management is of great significance for further strengthening and improving financial macro regulation, improving the ability to prevent systemic risks, smoothing the cyclical fluctuations of the economy, and maintaining stable and rapid economic and financial development.
Connotation of macro prudential policy framework
The concept of macro prudence was first put forward by the Bank for International Settlements in the 1970s. Its core idea is that only strengthening the risk supervision of a single institution will not be enough to maintain the stability of the entire financial system. Therefore, we should strengthen the macro vision of financial supervision and strengthen the monitoring aimed at the systematic risk of the entire financial system (Davis&Karim 2009). In September 2000, Andrew Crockett, President of the Bank for International Settlements, first advocated that financial stability should be divided into two aspects: micro prudential and macro prudential. Micro prudence refers to the stability of a single financial institution, while macro prudence refers to the stability of the entire financial system. Corresponding to these two levels are micro prudential supervision aimed at ensuring the stability of a single financial institution and macro prudential management aimed at maintaining the stability of the entire financial system. Compared with micro prudential management, which takes a single institution as the management object, macro prudential management focuses on preventing the possibility of systemic risks in the whole financial system.
From the perspective of the types of systemic risks, macro prudential management mainly includes two aspects: first, from the perspective of cross institutional dimensions, macro prudential policies are mainly aimed at the systemic and networked risks caused by the interaction and communication between different institutions. The current concentration is manifested in the identification and risk control of systemically important institutions, and the prevention of excessive risk concentration and risk diffusion; Secondly, from a cross temporal perspective, macro prudential management aims to prevent systemic risks and economic fluctuation risks caused by the pro cyclical nature of the financial system. Currently, it focuses on counter cyclical policy regulation and policy tool innovation, constraining institutional homogeneity, and regulating the frequency characteristics of the financial system.
The realization of macro prudential management objectives requires corresponding policy tools and institutional frameworks. This includes not only the use and development of existing policy tools, but also possible policy tool innovation and institutional innovation. Therefore, it can be said that the macro prudential policy framework is a dynamic development framework. Its main goal is to maintain financial stability and prevent systemic financial risks. Its main feature is to establish a stronger policy system that reflects counter cyclical nature.
Specifically, the current macro prudential policies mainly include capital requirements, liquidity requirements, leverage requirements, provision rules, special requirements for systemically important institutions, accounting standards, and centralized clearing of derivatives transactions. Macro prudential policy is closely related to monetary policy and micro prudential regulation, but there are differences. The macro prudential policy will use some tools similar to the micro prudential supervision, such as putting forward requirements for capital, provision, etc., but it essentially adopts a macro and counter cyclical perspective, with the main goal of preventing systemic risks, which is different from the micro prudential supervision that only focuses on the stability and compliance of a single institution. Similarly, although both monetary policy and macro prudential policy have the characteristics of countercyclical adjustment, monetary policy is mainly aimed at the situation of the real economy and aggregate issues, while macro prudential policy directly affects the pro cyclical fluctuations and risk transmission of the financial system, with the main goal of maintaining the security and stability of the financial system. Both monetary policy and macro prudential policy are counter cyclical macro management tools, but there are some differences in the scope and focus of action, which just can complement and reinforce each other.
International practice of macro prudential management
Since the outbreak of the international financial crisis, international efforts to promote macro prudential management have made positive progress.
All economies have made important progress in strengthening macro prudential management and financial system reform
The US Financial Reform Act, which has officially come into force, proposes to establish the Financial Stability Supervision Commission, which is responsible for identifying and preventing systemic risks. The Act requires strengthening the supervision of systemically important financial institutions, empowering the Federal Reserve to supervise large and complex financial institutions with assets of more than $50 billion, and to supervise the clearing, payment and settlement systems that are crucial to the financial market, so as to detect, measure and understand systemic financial risks. Moreover, the bill also proposes higher capital adequacy ratio, leverage restrictions, liquidity and risk management requirements for systemically important financial institutions.
The British government also announced that it would authorize the Bank of England to take charge of macro prudential management, establish a financial policy committee within the Bank of England to formulate macro prudential policies, and transfer the financial supervision authority from the Financial Services Authority to the Central Bank. At the same time, a special committee was established to re-examine the bank's business structure, including whether to separate investment banking and retail business. The European Union has established a special European Systemic Risk Committee, which is responsible for monitoring and evaluating systemic risks, conducting stress tests and implementing macro prudential management.
Progress on macro prudential management in the reform framework of Basel III
The Basel Committee (BCBS) recently proposed a series of tools for macro prudential management from the perspective of preventing systemic risk in the reform framework of the Basel III Accord, including counter cyclical capital buffer, systemically important bank supervision, etc.
In terms of pro cyclicality, first, on the basis of minimum capital requirements, capital retention buffer requirements are proposed. When the buffer is close to the minimum capital requirement, it will limit the income distribution of the bank and urge the bank to improve its capital strength through internal accumulation. The second is to propose an international unified standard for countercyclical capital buffer, which requires banks to establish more forward-looking capital buffers during the credit expansion period and use them in crises, so as to reduce the procyclicality of the entire banking system. In addition, BCBS is also studying other pro cyclical macro prudential management measures, including the measurement of fair value, and establishing a more complete and forward-looking provision system based on the qualitative and quantitative estimation of expected losses.
In terms of strengthening the supervision of systemically important banks, the International Monetary Fund (IMF), the Bank for International Settlements (BIS) and the Financial Stability Board (FSB) all proposed to evaluate systemically important financial institutions from the aspects of scale, substitutability and relevance. The Basel Committee (BCBS) requires systemically important banks to have stronger ability to absorb losses on the basis of minimum capital requirements. BCBS and FSB are developing relevant policies for systemically important banks, including additional capital requirements, emergency capital and Bailin debt. It is estimated that specific measures will be introduced soon. In addition, the research on measures related to risk disposal has also been stepped up. The Final Report and Recommendations of the Cross border Bank Resolution Working Group put forward that various tools and technologies should be comprehensively used to improve cross-border crisis management, and international cooperation should be strengthened.
In addition, the macro prudential policy framework has also made some progress in other aspects. BCBS adopted a prudent approach to determine liquidity standards, and designed liquidity coverage ratio (LCR) and net stable financing ratio (NSFR) as international standards for liquidity. It is clear that in principle, the provision system for forward-looking expected losses should be adopted, and the relevant rules are being studied. In addition, international organizations and major economies are also strengthening the supervision and reform of institutions and rules such as shadow banking, derivatives trading and centralized clearing, rating agencies, and accounting standards.
The Development of China's Banking Industry under the Framework of Macro prudential Policy
The institutional framework of financial macro prudential management shows us a new blueprint for future financial macro regulation and management. On the one hand, within the macro prudential framework, various macroeconomic and regulatory policies will be re integrated and innovated. Monetary policy, regulatory policy and macro prudential policy will cooperate and complement each other to better maintain economic growth and financial stability; On the other hand, under the framework of macro prudential management system, the thinking of financial regulation and supervision will also face new adjustments and changes. It can be predicted that the future financial macro prudential management framework will show the following characteristics: first, the management mode will change from the existing single compliance constraint to the coexistence of mechanism constraints and compliance constraints; Second, the goal of regulation and supervision will also change from the current single goal to multiple goals; Third, the development and innovation of various macro prudential policy tools and institutional arrangements will continue to emerge. The macro prudential policy framework will also have varying degrees of impact on the development of the entire financial industry, especially the banking industry. On the whole, it can be considered that risks, challenges and opportunities coexist.
New risks. According to international experience, the macro prudential policy framework will introduce counter cyclical capital buffers, dynamic provisions, additional capital requirements and other regulatory indicators and pro cyclical response tools. The use of these policy tools will change the original financial management mode dominated by single compliance constraints. The change of the rules of the game will bring more uncertainty to the operation of financial institutions. Under the macro prudential standard, the regulatory requirements faced by banks will continue to change with the overall macroeconomic fluctuations, the development of the whole industry and the business development of the institution itself. The continuous adjustment of regulatory constraints not only increases the risk of violations, but also amplifies the existing business risks. From the perspective of business development, the new regulatory framework will require business development to be consistent with economic development and avoid procyclicality. From the perspective of liquidity risk, with the increase of business uncertainty, the demand for liquidity will also increase accordingly, and liquidity risk will inevitably increase.
Opportunities. The macro prudential policy directly affects the pro cyclical fluctuation and risk transmission of the financial system, emphasizes the mechanism constraints in the management mode, and its main goal is to maintain the overall security and stability of the financial system. From the perspective of international practice and the simulation effect of various prudent policies, the dynamic counter cyclical adjustment policy has better constrained the pro cyclical expansion and contraction of financial institutions, which is not only conducive to maintaining overall stability, but also plays a regulatory role in the internal structure of the banking industry. The implementation of prudential policies will change the development mode of banks that only pursue scale without paying attention to efficiency and risk prevention, and encourage the development of institutions with strong risk resistance ability and development mode and growth rate compatible with the macro-economy. The regulatory policy from the perspective of prudence will optimize the structure of China's banking industry and help to further play the financing function of the banking system.
Future challenges. The establishment of counter cyclical financial macro prudential management institutional framework is a dynamic and constantly improving process. The prudential policy framework not only enhances the stability and anti risk ability of the entire financial system, but also poses many challenges to the development of China's banking industry.
First, there is a gap between the scientific management of loans and the objectives of macro prudential policies. The goal of prudent policy is that the overall lending rate should be commensurate with the needs of the real economy. In the past two years, the loan scale and business volume of China's banking industry have grown rapidly in the short term. Some banking financial institutions have extensive management, and the "three checks" of loans are not in place. At the same time, some medium - and long-term loan industries are highly concentrated, and the trend of medium - and long-term loans is increasingly obvious.
Secondly, there is a gap between the risk management level and the macro prudential requirements. The implementation of macro prudential policy tools will put forward new requirements for the risk management ability of the banking industry. At present, some financial institutions have weakened their awareness of operational risk management. At the end of 2010, some cases of banking financial institutions rebounded. Most of the Qilu Bank cases and other cases occurred in the so-called low-risk business field, and most of them were committed by internal personnel, which reflects the defects in the internal risk management mechanism of some banks. In addition, some banking financial institutions have weak market risk awareness and lack of risk management experience, especially in the face of the challenges of monetary policy transformation, interest rate marketization and exchange rate system reform, there is still a gap between the market risk management ability of banking financial institutions and the requirements of prudent policies.
Part 3: Model Articles on Policy Risks of Financial Institutions
Key words: financial ecology Rural financial risk control strategy
1、 An Analysis of the Current Situation of Rural Financial Risks
（1） Definition and explanation of relevant concepts
Financial ecology refers to a unified whole formed between various financial elements, financial elements and living environment in a certain time and space through financial instruments or financial behaviors such as financing, interest rates, exchange rates, financial products, etc. The rural financial ecology refers to a relatively independent financial environment system formed in rural areas of China. In terms of biology, the impact of ecosystems on various organisms is similar, and rural financial ecology also has an important impact on rural financial risks. Therefore, in view of the close relationship between the two, the control of rural financial risks cannot be separated from the study of rural financial ecology.
In the existing relevant literature, the research on financial risk has been relatively mature, while the systematic research on rural financial risk is rare. Based on the research results of relevant experts and scholars, the author believes that rural financial risk refers to the possibility that the rural financial market will fluctuate beyond industry expectations due to changes in economic and financial factors, which will lead to losses of all parties involved in rural financial activities.
（2） Analysis on the Problems of Rural Financial Ecology and the Current Situation of Rural Financial Risks in China
At present, the quality of China's rural financial ecological environment is poor. The author believes that the main problems are as follows. First, the development of urban finance and rural finance is unbalanced. China has long attached importance to the development of cities and industries, while ignoring the development of rural areas and agriculture. This development strategy has inhibited the development of rural economy, while the accumulation capacity of agricultural and rural funds is insufficient. The imbalance of rural financial development is mainly manifested in the insufficient demand for rural finance, and the corresponding market supply is also insufficient. Second, the degree of rural financial marketization is relatively low. In China, the phenomenon of administrative intervention in rural finance is relatively serious, and local governments often compete for financial resources in rural areas.
In recent years, rural finance has been well developed and the financial ecological environment has been improved to a certain extent. However, the existence of rural financial risks is objective. Rural financial risks will weaken the payment capacity of financial institutions, damage the interests of depositors and affect the healthy development of the national economy. At present, rural financial risks mainly include the following three points. First, the risks in rural financial supply and demand. Farmers or small and medium-sized township enterprises have a strong demand for loans. However, due to the lack of asset mortgage and credit guarantee, it is difficult to obtain financing in rural financial institutions without policy support. In the absence of legal norms, it is difficult to find appropriate investment channels for surplus private funds. In addition, from the perspective of economics, the proportion of agricultural loans in rural financial institutions has gradually decreased, which also has some rationality: capital always pursues projects with lower risk and higher relative yield. In 2008, there were about 120 million farmers who needed loans, and only 33. 3% of them received credit loans from rural cooperative financial institutions 2% 。 Second, the non-performing loan rate of rural financial institutions is high. In 2008, the average non-performing loan ratio of the four major commercial banks in China was 8. 5% 4%, while the non-performing loan rate of rural financial institutions reached 13 4%。 According to the statistics of the Central Bank, more than 85% of China's rural financial institutions are in a state of operating losses. Third, the operational risk of rural financial institutions has increased. In terms of liquidity, the development of deposit and loan business of rural financial institutions is unbalanced, and short-term funds are tight, which is mainly caused by the increase in the proportion of demand deposits in recent years. In addition, the equity structure of rural financial institutions is single, making it difficult to increase capital and share.
2、 Analysis of the Causes of Rural Financial Risks
There are many reasons for rural financial risks, including industrial development, ambiguous property rights, government policies, laws and regulations, and so on. The author believes that the causes of rural financial risks are mainly the following five aspects.
（1） Restrictions on the development of the primary industry
It is specifically manifested in the constraints of agricultural development, low efficiency of non-agricultural management in rural areas and the living environment of rural residents. In terms of constraints on agricultural development, at present, the contribution rate of China's primary industry to economic growth is far behind that of other industries. Agriculture is the main supporting industry for rural financial operation, and the slowdown of agricultural growth will inevitably have a negative impact on the business growth of rural financial institutions. In the aspect of non-agricultural management, most township enterprises are small enterprises dominated by individuals, and their ability to resist risks is very weak, which leads to the high non-performing loan rate of rural financial institutions to township enterprises. In terms of constraints on the living environment of rural residents, the agricultural business activities of a single farmer can only maintain the living expenses, while various external risks lead to the reduction of planting and breeding business income, which will break the balance and increase the risk of rural financial institutions.
（2） Management of rural financial institutions
The property right is vague, the asset liability management is not scientific, the internal control system is not strictly implemented and the staff's business level is not high. In terms of unclear property rights of rural financial institutions, at present, public property rights still account for a large proportion in rural financial institutions, resulting in their lack of independent management rights and difficulties in straightening out various relationships in operation and management. Generally speaking, the less clear the property rights of financial institutions are, the more likely it is that public enterprises and public financial institutions will rely on each other and jointly seek national interests. In terms of unscientific asset liability management, the capital level of rural financial institutions is low, and the management level and ability of their assets and liabilities are generally low. This is mainly caused by the failure to establish a scientific capital management system, the rapid expansion of asset and liability business scale, the expansion of risk assets and the improper management of asset liability ratio. In terms of internal control system, rural financial institutions have weak control power, which is reflected in the fact that the post responsibility system has not been actually implemented, and credit and financial management are loose. In terms of employees' professional level, the employees of rural financial institutions have weak risk awareness and lack of professional knowledge and skills.
（3） Adverse effects of government policies
It is embodied in tax policy, interest rate policy, fiscal policy and administrative intervention. In terms of tax policy, with the continuous reform of the financial market in recent years, the preferential policies of the state for rural financial institutions have been gradually cancelled. In terms of interest rate policy, since 1996, the Central Bank has reduced the deposit and loan interest rates for many times, narrowing the interest margin and causing losses in its operations. In terms of fiscal policy, rural financial institutions absorbed a lot of value preserving savings deposits between 1994 and 1998, while the state finance did not subsidize them, which objectively brought a huge burden to rural financial institutions. In terms of administrative intervention, in order to accelerate the local economic construction, local governments often force rural financial institutions to issue loans without detailed demonstration, which often increases the non-performing loan ratio of rural financial institutions.
（4） Lack of laws and regulations and supervision
The order of the rural financial market needs the establishment and maintenance of relevant laws and regulations. However, at present, the rural financial market is lack of norms, and the status and functions of the business entities - rural business entities have not been clearly determined, which gives the rural financial institutions too much flexibility to operate, and is vulnerable to strong market interference and administrative intervention. In addition, there are many related issues that need clear provisions of laws and regulations. Negation is bound to increase the potential risk of rural financial markets. In terms of market supervision of rural financial institutions, there are many problems in the relevant supervision units, such as extensive management content, simple management level, multiple repeated supervision and supervision vacuum.
Fifth, there is a lack of risk compensation mechanism, specifically reflected in the insufficient provision and write off of bad debt reserves, almost no price compensation, no market exit and the lack of effective external risk compensation mechanism. In terms of insufficient provision and write off of bad debt reserves, the current bad debt reserves of financial institutions are far from making up for risk losses, leading to risk accumulation. In terms of price compensation, there is almost no interest rate difference in rural financial institutions because China has been implementing strict interest rate control for many years. In terms of market exit, under normal circumstances, when the net asset value of a financial institution becomes zero or negative, it should go into bankruptcy proceedings. However, the current prevailing practice in China is to merge the problematic financial institutions into other better financial institutions, which leads to the accumulation of risks. Finally, there is still a lack of effective external risk compensation mechanism in China.
3、 Control Strategies of Rural Financial Risks
Controlling rural financial risks is a systematic project, which requires the active participation of all market entities. Through the comparative study of relevant literature and the above analysis, the author puts forward the following three suggestions for reference in combination with China's financial ecological environment and the actual situation of the rural financial market.
（1） Improve the operation and management of rural financial institutions
Specifically, it includes clarifying property rights, improving corporate governance, disposing of non-performing assets, strengthening internal control, implementing talent strategies, improving service quality, carrying out financial innovation and building good public relations. In terms of clarifying property rights and improving corporate governance, specific measures can be taken from the following two points: broadening capital raising channels and further improving corporate governance structure according to the requirements of modern enterprise system. In terms of disposal of non-performing assets, the scale of non-performing loans of rural financial institutions in China is very large. We should actively dispose of non-performing assets in the aspects of regular collection, separate account operation, write off and internal digestion. In terms of strengthening internal control, rural financial institutions should adhere to the principle of separation of powers and mutual checks and balances of decision-making system, implementation system and supervision feedback system. The specific measures are as follows: develop credit rating standards and do a good job in rating; Strictly implement the separation system of review, loan and inspection, and establish a power constraint mechanism for loan management; We will improve the discipline and restraint mechanism for loan issuance, and increase audit efforts; Perfect the loan risk responsibility mechanism, and implement the guarantee and mortgage of loans; Strengthen financial expense management and strictly standardize internal financial control. In the implementation of talent strategy, the specific measures are as follows: strengthen the talent construction of financial institutions at all levels of management; Pay attention to the training of employees; Establish diversified and highly transparent incentive mechanism; Strengthen the pertinence of the school to cultivate talents, and vigorously carry out order type talent training. In terms of improving service quality and carrying out financial innovation, rural financial institutions should adapt to the needs of agricultural industrial restructuring, expand new credit fields, actively expand rural financial business, and open intermediary business to disperse business risks. In terms of building good public relations, rural financial institutions should properly handle the relationship with local party and government, township enterprises and farmers, and create a relaxed environment for the smooth operation of rural financial institutions.
（2） Strengthen legal system and credit construction
It includes four aspects. We should speed up the construction of the legal system, strengthen law enforcement, improve the credit awareness of the whole society, strengthen external supervision and industry self-discipline, and standardize private finance. In terms of speeding up the construction of the legal system and strengthening law enforcement, first, we should clarify the property rights relationship of rural financial institutions, and second, we should enter and exit according to law. At the same time, we should strengthen legal publicity and strengthen fair law enforcement. In terms of improving the credit awareness of the whole society, the first is that the government should carry out credit education within the whole society, and the second is to establish a corresponding credit incentive and constraint mechanism to reverse the current situation of poor credit environment in rural society, and farmers' generally weak concept of keeping faith. In terms of strengthening external supervision and industry self-discipline, it is necessary to correctly position the supervision responsibilities of rural financial supervision subjects, pay attention to risk prudential supervision, and fully play the role of rural financial self-discipline organizations. In terms of regulating private finance, we should establish a private finance access system, protect normal and legal lending activities, gradually promote the formalization of private finance, and improve the stability of the financial system.
（3） Provide policy support and improve risk compensation mechanism
First of all, in terms of policy support, in view of the weak strength and poor risk resistance of most rural financial institutions, the state should give appropriate policy support to such financial institutions, including tax, finance and finance. In terms of tax policy, due to the special contributions of rural financial institutions in supporting "agriculture, rural areas and farmers" and the practical difficulties in business development, the country should give rural financial institutions new tax preferences on the basis of efficiency and fairness. In terms of fiscal policy, the government should allocate special funds to provide appropriate financial compensation to rural financial institutions in difficult areas. In terms of financial policies, the Central Bank should relax the criteria for granting re loans to rural financial institutions, and allow qualified financial institutions to implement a lower deposit reserve ratio. Improving the risk compensation mechanism includes improving the internal risk compensation mechanism and external risk compensation mechanism of rural financial institutions. The key to improving the internal risk compensation mechanism is to improve the capital adequacy ratio, so that its capital adequacy ratio reaches the standard of 8%; Improving the external risk compensation mechanism of rural financial institutions includes expanding the scope of national financial subsidies, vigorously developing agricultural insurance, establishing a credit guarantee system and an open deposit insurance system.
reference:
[1] Tian Xinshi. Theory and Practice of Financial Risk Management [M]. Beijing: Science Press, 2006
[2] Shen Bing. Vulnerability and Risk Prevention of Rural Finance in China [J]. Economic Review. 2006 (10): 12-15
[3] Zhan Zhengyong. Reconstruction of China's rural financial system: from the perspective of financial repression theory [J]. Journal of Jiangxi University of Finance and Economics. 2007 (1): 22-25
[4] Xu Liangliang. Research on Current Rural Financial Ecological Problems in China [J]. Economic Review. 2007 (1): 32-34
Part 4: Model Articles on Policy Risks of Financial Institutions
Science and technology finance is a theoretical issue raised in practice
There is no term "science and technology finance" in foreign literature. Science and technology finance is the product of China's economic system, financial operation mechanism and technological innovation system. The thought of science and technology finance is derived from the practice of science and technology innovation and has three theoretical problems: the contradiction between supply and demand; Risk and return matching; The market and government operating mechanisms are coordinated. The difficulty of financing for science and technology enterprises, especially those in the start-up stage, is an important reason that restricts China's industrial upgrading and economic transformation.
Under the existing financial system, it is more difficult for technology enterprises to finance, not because of the shortage of financial resources, but because of the lack of supply willingness of financial institutions. China's venture capital, angel investment, trust, science and technology credit, guarantee, insurance and other high-risk products are not only in short supply, but also have a low risk tendency. The business risks of enterprises in the start-up and growth stages are high, and the transaction costs of financing are relatively high. Therefore, the difficulty of combining science and technology with finance is the problem of structure, not quantity. The root of the structural problem lies in the mismatch between the risks and benefits of technological financial products.
There are two kinds of mismatches between risks and benefits in the financing of China's science and technology enterprises. One is the mismatch between risks and benefits for science and technology enterprises, which is reflected in the mismatch between innovation risks and innovation benefits. The problem focuses on the weak protection of intellectual property rights; Second, the risk and return of financial institutions do not match, and the problem focuses on the imperfection of China's financial structure and market. In the case of mismatch between risk and return, the problem of financing difficulty of science and technology enterprises is more prominent.
The mismatch between risk and return, on the one hand, makes the demand for financial funds of science and technology enterprises more intense; On the other hand, financial and quasi financial institutions are more willing to invest in the middle and late stages of risk and return matching than in the start-up stage of technology enterprises. Therefore, the proposal of science and technology finance stems from China's failure to properly handle the relationship between the government and the market, as well as the resulting economic system and financial operation mechanism.
Financial investment in science and technology enterprises and financial financialization have alleviated the problem of financing difficulties of science and technology enterprises in China to a certain extent, but increased the dependence of science and technology enterprises on the government. In accordance with the requirements of the government, science and technology enterprises are transformed to obtain government funding, rather than financing from financial institutions through marketization. In the context of independent innovation, industrial upgrading and economic transformation, the government's financial funds cannot meet the financing needs of science and technology enterprises at the start-up stage, and the excessive investment of government financial funds in science and technology enterprises does not conform to the market law. Therefore, the fundamental goal of the development of science and technology finance is to get rid of the dependence of enterprises on government funds and truly become the main body of the market.
Cognition deviation and actual effect of science and technology finance
Judging from the pilot projects of science and technology finance in various places, the effect is not ideal. The reason is that the pilot work of science and technology finance has not solved the relationship between the government and the market. Because when the boundary between the government and the market is not clear, price leverage cannot adjust the behavior of technology enterprises and financial enterprises, and cannot form a match between risk and return; At the same time, due to the mismatch between risk and return, the supply and demand of financial products combining technology and finance are unbalanced.
The understanding of local governments on science and technology finance is biased:
First, overemphasize the problems existing in the financial system and require the reform of the financial system and the innovation of the financial operation mechanism, so as to solve the problem of the mismatch between the supply of scientific and technological products, risks and returns;
Secondly, it overemphasizes the problems existing in science and technology enterprises and requires them to standardize finance and strengthen integrity construction, so as to solve the problems of high risk and high financing transaction costs of science and technology enterprises;
Third, the government should emphasize the problems in promoting the integration of science and technology and finance, require the reform of the government management system, use market means to improve the efficiency of the use of financial funds, that is, give play to the guiding role of the government. The root cause of the misunderstanding lies in the failure to accurately grasp the characteristics of science and technology finance. The key to solving this problem is to straighten out the relationship between science and technology enterprises, finance and quasi financial institutions, and the government:
First, the policy nature of science and technology finance. The main obstacle to the integration of science and technology and finance is that financial institutions are faced with two kinds of risk and return matching relationships: low risk and high return, high risk and low return. In this context, the development of science and technology finance is to solve the problem of high risk and low return. The goal of developing science and technology finance is technological innovation, industrial upgrading and structural transformation, not only to maximize the interests of stakeholders. Therefore, the development of science and technology finance cannot be separated from the government, otherwise the goal will be difficult to achieve.
Second, the phased nature of science and technology finance. Science and technology finance is a unique product in the process of China's market economy transformation. After the market economy is improved, it will withdraw; In addition, it does not provide financial support for the entire life cycle of technology enterprises, but the characteristic stage - start-up and growth period, especially the death valley where technology enterprises are most difficult to finance. In the case of imperfect market, it is also necessary for the government to use financial means to make up for the lack of market, otherwise scientific and technological innovation may be bogged down.
Third, the macro nature of science and technology finance. Under the vertical management mechanism of financial institutions and financial regulators, the space for local governments to regulate is limited. At present, the latest document issued by Science and Technology Finance is the Implementation Plan for Promoting the Integration of Science and Technology with Finance Pilot jointly issued by the Ministry of Science and Technology, the People's Bank of China, the CBRC, the CSRC and the CIRC. This document is difficult to coordinate across departments, and the implementation effect needs to be evaluated. It is necessary to carry out further top-level design and structural reform.
The role of government in the development of science and technology finance
The main task of the development of science and technology finance is to improve the organization system of science and technology finance, enrich the products of science and technology finance, and improve the market operation efficiency of science and technology finance. However, in order to achieve seamless integration of technology and finance, it is not enough only to have government guidance, but also to have government intervention appropriately. In order to achieve the above three goals, the government should play an important role in the following three aspects.
First, increase financial capital investment to make up for the risk losses of financial institutions and quasi financial institutions as much as possible. There are three forms of financial funds used in science and technology finance: direct financial allocation, free provision; Low cost provision through policy based finance; Through the market, it is normally provided according to the market-oriented operation. At present, China mainly adopts the first and third forms. Limited by the government's financial resources, it is difficult to expand the scale of free funds provided by the government. Constrained by the management of state-owned assets, in order to pursue the matching of risk and income, venture capital funds are more invested in the middle and late stages, and the effect of both forms is not obvious. The second form is relatively seldom used. There are large scale policy banks in China, but policy guarantee companies, insurance companies, securities companies and loan companies are still scarce. Therefore, it is necessary to develop policy financial institutions between free supply and high cost.
Second, adjust the structure of state-owned financial assets of local governments and enrich the supply of policy based financial products. The existence of state-owned operational assets has an impact on the construction of a perfect market economy. In theory, state-owned assets should be an invalid area of operating the market, rather than competing with the people for benefits. Therefore, it is necessary to adjust the structure of state-owned operational financial capital and turn profitable financial capital into policy oriented science and technology finance. This can quickly solve the problem of insufficient supply of science and technology finance and improve the science and technology finance service system.
Third, system reform and mechanism innovation, improve the policy system of science and technology finance, and remove obstacles to the integration of science and technology and finance. System reform and mechanism innovation are the fundamental path for the integration of science and technology and finance, and are also long-term effective measures. The difficulty of current system and mechanism reform lies in the lack of consensus and motivation. The lack of consensus comes from the different demands of different stakeholders, and the lack of power comes from the long-term and non-profit nature of science and technology finance. However, local governments are difficult to do anything in system and mechanism innovation, so it is necessary to formulate a series of reform policies for science and technology finance at the national level.
Part 5: Model Articles on Policy Risks of Financial Institutions
At present, the specific financial system in China is still the financial regulation of controlling interest rates, and the reform of interest rate marketization has not been fully realized. In addition, research on the relationship between monetary policy and bank risk has always focused on the quantitative relationship between monetary policy transmission and bank credit, while ignoring the qualitative relationship between monetary policy transmission and bank credit. The study of the quality relationship between monetary policy and bank risk-taking behavior is of great importance to the risk control and prudent monetary policy formulation of China's banking industry and other financial institutions.
Borio&Zhu (2008, And finally act on the real economy.
To test the relationship between monetary policy and bank risk-taking behavior, refer to the model of DelisandKouretas (2011) and build a model: Z=a+b * Z (- 1)+c * MP+d * LNASSET+e * CAR+f * GGDP
We use Z value (bankruptcy risk) as the risk measurement index of the bank. The negative growth rate of m2 (M2G) and the benchmark one-year loan interest rate IR measure the monetary policy stance. The growth rate of nominal GDP (GGDP) is used to measure macro control variables, mainly considering bank capital level, capital adequacy ratio (CAR) and bank asset size (LNASSET).
Note: The value in parentheses represents the value of P.
The results show that there is a significant negative relationship between monetary policy proxy variables (M2G, IR) and banks' risk-taking. It shows that under the premise of controlling other influencing factors, loose monetary policy will lead to higher bankruptcy risk of banks and higher proportion of non-performing loans. When adopting a loose monetary policy, the central bank will increase the monetary environment in the money supply market, which will become quite abundant. The economy will be stimulated, which will lead to more active investment. Investors will prefer investment projects with high returns and high risks, so that banks will increase their risk. The loose monetary policy means that the benchmark one-year loan interest rate IR will decline, so the deposit and loan interest rate of the bank will shrink, and the interest income will decline. In addition, because the bank is a profit seeking financial institution, in order to maintain profits, the bank will choose high-risk and high-yield projects, and the bank will be more willing to increase the proportion of risky assets held.
The first order lag term Z (- 1) of commercial bank risk shows a significant positive correlation, indicating that the bank's bankruptcy risk behavior is continuous. The risk of banks will accumulate in the process of operation, and the risk continuity of the banking industry will make it more difficult to control the risk of banks, increasing the difficulty of risk control.
Part 6: Model Articles on Policy Risks of Financial Institutions
Key words: macro prudence; Systematic risk; Time dimension; Cross industry dimension; Policy tools
CLC No.: F830 Document ID No.: A Article No.: 1004 － 0544 (2012) 04 － 0070 － 04
This global financial crisis, which is unprecedented in a century, was triggered by the US subprime mortgage crisis. It has caused unprecedented serious damage to the world economy, and has also led to major changes in the international financial system. In the discussion on financial regulatory reform in post crisis countries, the term "macro prudential" has become increasingly popular. The G20 Summit and relevant international organizations have confirmed and implemented the establishment of a macro prudential policy framework as a legal path for a new round of financial system reform. So, what is "macro prudence"? What is its connotation? What are its scope of action and policy tools? These issues are not only the policy issues that countries must first determine when formulating the macro prudential regulatory framework, but also the theoretical issues that current financial research must solve. This paper starts with the origin and evolution of the term "macro prudential", analyzes the meaning and characteristics of macro prudential, and then elaborates its scope of action and policy tools, so as to participate in the ongoing discussion of macro prudential issues at home and abroad.
1、 The proposal and evolution of "macro prudence"
The term "macro prudence" is not a new concept emerging after the subprime crisis. As a financial term, it has been recorded in the relevant literature of the Bank for International Settlements (BIS) and the Basel Committee in the late 1970s. In October 1979, the Bank of England for the first time made a comparison between "macro prudential" and "micro prudential" in a background information provided to a BIS working group. The document points out that prudential supervision measures mainly focus on the sound operation of a single bank and the protection of depositors, which can be described as a "micro prudential" approach to banking supervision. However, this approach needs to be coordinated with a broader perspective of prudential consideration, namely the "macro prudential" approach. Macroprudential considerations are about the affordability of the market as a whole rather than a single bank. Since then, "macro prudence" as a proper term has often appeared in the internal documents of BIS, such as the work report of the European Monetary Council "Market Size of Derivatives Markets and Relevant Issues of Macro Prudential Risk Measurement" (1995), but it has not officially entered the public eye.
In essence, "macro prudential" is proposed as a method of financial supervision, and its fundamental reason lies in the existence of systematic risk. Under the background of economic globalization, financial integration and liberalization, the business model and operating characteristics of financial institutions and financial markets have undergone tremendous changes, systematic risks are increasing, and financial crises occur frequently, prompting regulators to consider solutions to financial problems from a deeper level. Compared with the micro prudential approach focusing on the sound operation of a single institution, macro prudential approach provides a broader perspective for regulators to identify, analyze, monitor and control systemic financial risks. After the outbreak of the Asian financial crisis, the term "macro prudential" was not only widely used in a series of BIS research reports, but also gradually accepted and adopted by IMF and other international organizations. For example, the International Monetary Fund (IMF) proposed a set of macro prudential indicators (MPIs) on the soundness of the financial system in 2000 to provide data support for promoting the financial sector assessment plan and conducting macro prudential analysis.
As an important regulatory concept and method, macro prudence has been formally introduced into the policy framework of financial regulation, which is an inevitable choice made by the international community on the basis of learning the painful lessons of the financial crisis. The outbreak of the subprime mortgage crisis and its global spread fully exposed many defects in the international and national financial systems, triggered profound reflection on the existing financial regulatory system, and also prompted governments to strengthen the position of macro prudence in the current policy arrangements. As pointed out in the Turner Report, "the lack of macro prudential supervision perspective and the failure to regulate and use macro prudential methods to deal with systemic risks is one of the most important incentives leading to the financial crisis". It can be said that one of the major lessons of this financial crisis is that we should not only focus on the risk prevention of individual financial institutions, but also prevent financial risks from a systematic perspective, and the macro prudential policy is just the good medicine for systematic risks. In view of this, strengthening macro prudential supervision, as an important policy measure to deal with systemic risks, has quickly become the consensus of the international community. For example, the Group of Twenty (G20) introduced the term "macro prudential" from the London Summit Communiqu é and Declaration, formally adopted the terms "macro prudential regulation" and "macro prudential policy" in the final meeting documents of the Pittsburgh Summit, and explicitly proposed the requirements for the development of a "macro prudential policy framework" at the Seoul Summit. The Basel III issued by the Basel Committee creatively designed a number of regulatory tools with macro prudential characteristics, highlighting the reform idea of attaching equal importance to micro prudential supervision and "macro prudential coverage". The Financial Stability Board (FSB), established by the restructuring of the Financial Stability Forum (FSF), through a series of special reports and recommendation documents, summarized the latest progress on effective macro prudential policy tools at the international and national levels, and put forward a series of policy recommendations for building a macro prudential policy framework. At the same time, some experts and scholars have also carried out research on the connotation and extension of the concept of macro prudence and formed some theoretical achievements. It can be said that in the post crisis era, "macro prudential" has become a term commonly used by international financial organizations, financial regulatory authorities of various countries and financial academia in the hot discussion of financial regulatory reform.
2、 The meaning and characteristics of macro prudence
Although "macro prudence" has become a fashionable term in the context of this crisis, and building a policy framework for macro prudence has become a hot topic in international financial organizations, there is no consensus on what is "macro prudence" at present based on the existing research results. Different users have defined them from different perspectives, and there are three representative ones.
（1） BIS definition of "macro prudential approach"
Historically, BIS is the first to focus on macro prudential issues and the most in-depth research. As early as October 2000, Andrew Crockett, then the president of BIS, interpreted the meaning of "macro prudence" in a speech: "macro prudence" is a regulatory model in which the macro financial management authority supervises the financial system as a whole in order to reduce the financial costs caused by financial turbulence and ensure financial stability. The macro prudential approach is different from the micro prudential supervision, and has the following two characteristics: first, the financial system is regarded as a whole to be concerned, aiming to reduce the loss of macroeconomic output caused by financial recession. Second, focus on the supervision of collective actions of financial institutions to identify the aggregation risk (endogenous) of the financial system. Subsequently, Claudio Borio, head of BIS policy risk and research department, further pointed out in the work report of Building a Macro prudential Framework for Financial Supervision that macro prudential supervision includes two aspects: one is the time dimension, that is, the pro cyclicality of the financial system. To this end, it is necessary to establish a prudent framework to encourage the establishment of a buffer during economic growth to reduce the impact of economic recession and act as a stabilizer; Second, cross industry dimension. That is, pay attention to the similar risk exposure of financial institutions in the system and the correlation between these institutions. Therefore, it is necessary to strengthen the supervision of systemically important institutions to prevent the overall risk of the financial system. In February 2010, Herv6 Hannoun, a senior official of BIS, summarized the definition of "macro prudence" in his speech entitled "Towards a Global Financial Stability Framework". he
It is pointed out that in BIS, we define "macro prudential" as a regulatory method that uses prudential tools to promote the overall stability of the financial system rather than the stability of a single institution. In other words, the macro prudential approach focuses on the whole financial system relative to a single financial institution, and deals with the overall risk according to the collective actions of financial institutions.
（2） FSB's definition of "macro prudential policy"
On the basis of absorbing the research results of IMF and BIS and summarizing the latest international practices, the FSB defines macro prudential policy as a policy that mainly uses prudential tools to (1) curb the accumulation of financial imbalances and build defense facilities to reduce the speed and strength of the downward trend and its impact on the economy; (2) Identify and deal with common risk exposure, risk concentration, relevance and interdependence, prevent risk contagion and diffusion and endanger the functioning of the entire financial system, thereby inhibiting systemic or system wide financial risks, and thus limiting the scope of impact of interruptions provided by key financial services that may cause serious harm to the real economy.
（3） Domestic definition of "macro prudential management"
Some domestic scholars believe that macro prudential management mainly aims at preventing systemic financial risks, regards the financial system as a whole, studies the connection between the financial system and the macro-economy, and the interrelationship within the financial system, and monitors and evaluates the vulnerability of the financial system through qualitative and quantitative analysis, early warning, macro stress testing and other means, Identify the cross industry and cross market distribution of financial risks in the financial system and the amplification of financial risks by the pro cyclical nature of the financial system, and make targeted adjustments to regulatory standards, standards or indicators to achieve the ultimate goal of financial stability and ensure stable economic development.
In analysis, although the above three definitions have different perspectives and expressions, they all contain three basic elements of the concept of "macro prudence": one is to prevent systemic financial risks; the other is to consider the financial system as a whole and its interaction with the real economy; The third is to identify and monitor the overall risks of the financial system with prudential tools as the main means. Based on this, the author believes that "macro prudence" is a regulatory method relative to "micro prudence", which refers to the identification, monitoring and disposal of the overall risks of the financial system and its impact on the macro-economy by using prudential tools as a whole, so as to prevent the accumulation and concentration of systemic risks and maintain the stability of the entire financial system.
It can be seen from this definition. Although both macro prudential and micro prudential belong to the category of financial prudential supervision. However, there are some differences between macro prudential and micro prudential in terms of regulatory objectives, regulatory objects, and functional roles, so it has its own characteristics, which are mainly reflected in: first, the regulatory objective of macro prudential is not to prevent the crisis of a single financial institution, but to prevent systemic financial risks, so as to avoid the loss of macroeconomic output. Second, the focus of macro prudential attention is not the operation and risk status of a single financial institution. Instead, it regards the financial system as a whole, considers the changes of systemic risks and their impact on the macro-economy from a systematic perspective, and emphasizes the attention to the macro risks of the entire financial system and the financial market conditions. Third, the function of macro prudence is not to ensure the steady operation of a single financial institution by measuring and monitoring its capital structure, leverage ratio, and large risk exposure, but to use prudential tools to identify, analyze, monitor, and control the pro cyclicality of the financial system, the common risk exposure and interrelation of financial institutions at the macro level, In order to prevent the accumulation and concentration of systematic risks. To maintain the stability of the entire financial system.
3、 Scope and policy tools of macro prudence
Research shows that the important mission of macro prudence is to deal with systemic risks. As a supervision method and a policy perspective, it must be based on micro prudential supervision, complement micro prudential supervision, and interact with other public policies to maintain financial stability. As far as the scope of action is concerned, macro prudential regulation aims to solve the risks in two dimensions of the financial system: one is the time dimension, which refers to how risk accumulates with changes in the macroeconomic cycle, and the related policy problem is how to deal with the pro cyclicality of the financial system; the other is the cross industry dimension, which refers to the distribution of risks in the financial system at a given time point, The related policy issue is how to deal with the concentration of systemic financial risks.
（1） Time dimension and policy tools
The time dimension focuses on how the risk of the financial system evolves over time, how the interaction within the financial system and between the financial system and the real economy can be amplified, and sometimes even lead to financial crises. Therefore, the key problem to be solved in implementing macro prudence is how to reduce the pro cyclicality of the financial system. The procyclicality here refers to the phenomenon that financial institutions magnify the economic cycle by pursuing profits. In the period of economic growth, with the rapid growth of credit supply and investment, and the mismatch of leverage and maturity, the financial system tends to have excessive overall risk exposure. Once the cycle reverses, the economic recession will lead to a wide range of financial difficulties, which will be further amplified with the massive deleveraging, reduction of credit supply and key financial services.
To deal with and deal with the risks brought about by the pro cyclical nature of the financial system, it is useless to rely solely on micro prudential supervision, and macro prudential supervision must be strengthened. From the perspective of international practice, to build a macro prudential policy framework, the focus is to implement various counter cyclical buffer mechanisms to prevent the accumulation of systemic risks. After the outbreak of the subprime crisis, some counter cyclical policies and measures have been created internationally, mainly including:.
1. Counter cyclical capital buffer mechanism. The countercyclical capital buffer mechanism specified in Basel III is a typical example of measuring and controlling systemic risk by improving tools, for example, taking measures to reduce the procyclicality of risk weighted assets to reduce minimum capital requirements; Implement specific macro prudential coverage through different forms of counter cyclical capital buffer; Encourage institutions to accumulate buffer by restricting capital distribution. In addition, there are permanent capital retention buffers, minimum leverage ratios, new liquidity standards, etc., which also help to curb procyclicality.
2. Securities margin and deduction rate used as collateral. In order to limit the leverage accumulation during the economic boom and reduce the systemic risk during the market downturn, the Committee on the Global Financial System (CGFS) put forward suggestions on margin requirements and deduction rates, explored several counter cyclical change measures to design margin and deduction rates, so as to reduce the pro cyclical nature of leverage in the securities financing market, And weaken the systematic impact of the subsequent deleveraging.
3. Provision for expected losses. The International Accounting Standards Board (IASB) and other organizations have issued accounting standards on loan loss reserves, which provide a forward-looking method for calculating loan losses, and will also have an important impact on curbing procyclicality.
In addition, developed countries such as the United States and Europe have also adopted some counter cyclical policies and legal measures at the domestic legislative and policy levels. China has also written "building a counter cyclical financial macro prudential management institutional framework" into the "12th Five Year Plan" for national economic and social development.
（2） Cross industry dimensions and policy tools
The cross industry dimension reflects the risk distribution and concentration of the financial system at a specific time point. Due to the existence of "synthetic fallacy" and "herding effect", the risk of financial market has the characteristics of "endogeneity". The common behavior of financial institutions at the same time point will lead to a sharp increase in the aggregate risk of the financial system. These risks may be caused by the common or similar risk exposure of financial institutions in the system, or by the direct correlation between balance sheets caused by the cross business between institutions. It is undoubtedly an important mission of macro prudential policy to prevent and respond to such systematic risks.
From the cross industry perspective, the key problem to be solved in implementing macro prudential supervision is how to reduce the concentration of systemic risks, control similar or common risk exposures of financial institutions and the correlation between institutions. The most important thing is to strengthen the supervision of systemically important financial institutions (SIFIs). The so-called systemically important financial institutions refer to those institutions whose disorderly bankruptcy will seriously interfere with the financial system and economic activities in a wider range due to their scale, complexity and system relevance. From the perspective of international practice, policy tools in this dimension are still under development. The existing practice mainly focuses on the following aspects.
1. Strengthen the capital and liquidity regulatory framework. Basel III except that
In addition to raising the capital and liquidity requirements of a single bank to enhance its loss absorption capacity, thereby reducing the possibility of bankruptcy and spillover effects, it also stipulates some requirements to reduce the concentration of systematic risks, such as higher capital requirements for trading and derivative activities, complex securitization businesses and off balance sheet risk exposure; Encourage banks to use central counterparties for OTC derivatives transactions; Solve the liquidity requirements of financing risks caused by excessive reliance on short-term wholesale financing; Higher capital requirements have been set for risk exposure between financial sectors to reduce risks at the institutional level. To promote the resolution of systemic risks and the interrelation between global systemically important financial institutions.
2. Build a regulatory framework for systemically important financial institutions. In view of the important influence of these "big but not failing" institutions on the accumulation of systemic risks and the stability of the financial system, some international organizations have begun to build special regulatory frameworks and standards for the purpose of macro prudential. For example, the FSB has put forward a policy framework to address its moral hazard and external risk, and has put forward Policy Recommendations and Timetables for the Effective Disposal of Systemically Important Financial Institutions, emphasizing the orderly restructuring or cancellation of problematic institutions to mitigate the impact of their failure on the financial system, while strengthening the supervision of such institutions and early intervention, To reduce its potential impact on the entire financial system.
3. Suggestions on strengthening OTC derivatives infrastructure. The proposal aims to reduce the contagion effect of risks by strengthening the reform of OTC derivatives market and promoting countries to maintain international consistency in fulfilling their commitments in standardization, central clearing, organized trading platforms, and reporting OTC derivatives transactions to trading databases.
Part 7: Model Articles on Policy Risks of Financial Institutions
[Key words] Regional financial risk; Content definition; reason; to guard against; Resolve
1、 Definition of regional financial risks
Risk, which focuses on the uncertainty of loss, usually refers to the degree of difference between people's expected goals and their actual results in a specific time and environment. In the competitive field of market economy, any industry may face operational risks at any time when facing an uncertain business environment, and the financial industry is no exception. The safe, efficient and stable operation of the financial system plays a vital role in the overall stability and development of the economy. Financial risk usually refers to the possibility that a certain amount of financial assets will suffer loss of expected income in the future. According to the scope of influence of financial risks, financial risks can be divided into macro financial risks, meso financial risks and micro financial risks. Meso financial risks are regional financial risks. Regional financial risk is a regional concept, which is mainly formed by the accumulation, spread and diffusion of micro financial risks of one or some institutions in the region, and also includes the related financial risks caused by the spread and diffusion of financial risks from other regions with economic ties to the region. Due to the strong linkage, chain and diffusion of financial risks, individual financial risks can form regional financial risks through accumulation and spread. Regional financial risks will affect the economic development of other regions through interrelation. Accumulation to a certain extent will lead to global financial risks, resulting in a systematic financial crisis.
2、 Characteristics and manifestations of regional financial risks
(1) The risk of commercial banks in the region is the main source of regional financial risk. In China and its internal regions, the banking industry is the leader of the financial industry in terms of scale and importance, the most important component of the regional financial system, and the main financial institutions in the region. Its development degree has a high impact on the development of the financial industry in the region, especially in small and medium-sized cities. Therefore, the main source of regional financial risk is the risk generated by commercial banks. To some extent, the study of regional financial risk can be transformed into the study of regional commercial bank risk. (2) The prevention and resolution of regional financial risks are increasingly closely related to national and local governments. Regional financial institutions are not only affected by national macro-control policies, but also local governments will formulate corresponding policies for regional economic development planning. Therefore, the regional economic system is affected by the national and local governments at the same time, and the specific policy objectives of the two are sometimes not unified, which makes the prevention and resolution of regional financial risks more complicated.
3、 Causes of regional financial risks
(1) Financial institutions' own reasons. Under the market competition mechanism, financial institutions, as enterprises, pursue the maximization of profits. Most financial institutions generally use the expansion of scale as a means of pursuing interests. The business model of "focusing on quantity, ignoring quality; focusing on scale, ignoring efficiency" makes financial institutions expand in size, but also increases the degree of regional financial risk. (2) Local governments intervene too much in regional financial activities. The excessive intervention of local governments in regional financial activities is an important reason for regional financial risks. The steady development of the market economy cannot be separated from the intervention of the government; But too much government intervention will induce regional financial risks instead. (3) A country's macro financial policies have different impacts on economic activities in different regions. Because the more developed regions play an important role in China's economy, their economic fluctuations are basically consistent with the overall economic fluctuations in China. Generally speaking, China's macro financial policies are more based on the level of economic development in economically developed regions, that is, a single macro financial policy. However, regional economic development levels are different, and the growth level of the financial industry in different regions is quite different, which makes the national unified macro financial policy have different effects in different regions. For economically developed regions, in the face of national macro policies, financial activities can be rapidly adjusted through sound financial markets, diversified financial instruments, advanced industrial structures, etc., to achieve the expected policy effects on the premise of risk diversification; On the contrary, for underdeveloped regions, due to the low-level industrial structure, the simplification of financial instruments, imperfect financial institutions and other reasons, the negative impact of policy adjustment cannot be resolved or reduced in the operation of economic activities. Therefore, under the unbalanced development pattern, a single macro financial policy may become an incentive for the formation and accumulation of financial risks in economically underdeveloped areas.
4、 Prevention and resolution of regional financial risks
(1) Strengthen asset risk management of regional financial industry. Strengthening asset risk management of regional financial industry is an important measure to improve the asset quality of regional financial industry and strengthen the self-discipline ability of financial institutions, especially to strictly implement asset liability ratio management. (2) Local governments should reduce excessive intervention in the economy. Local governments should reduce excessive intervention in the economy, establish and maintain a good environment for economic operation through legal, administrative and other means, so as to reduce the possibility of regional financial risks. (3) Establish a sound regional financial risk early warning system. The prevention and resolution of regional financial risks shall follow the sequence of prevention in advance, control of incidents and remedy afterwards. The key entry point to prevent and resolve regional financial risks should be prevention in advance. The core of prevention in advance is to establish a sound regional financial risk early warning system.
reference
[1] Li Jiaxao, Qin Hong, Luo Jianchao. On the Prevention and Resolution of Regional Financial Risks [J]. Business Research. 2006 (10)
[2] Ji Yang. Research on the Causes and Prevention of Regional Financial Risks in China [J]. Economic Research Guide. 2011 (3)
Chapter 8: Model Articles on Policy Risks of Financial Institutions
Key words: big but not falling; Development and evolution; Solution; Systemically important organization
JEL Classification No.: G18 Chinese Library Classification No.: F830 Document Identification Code: A Article No.: 1006-1428 (2012) 02-0034-05
Taking the United States as a typical case, this paper combs the historical context of the evolution and development of the "big but not fail" policy since its establishment, and analyzes its advantages and disadvantages. Then, it summarizes the policy measures put forward by international organizations and some developed countries in the financial industry after the crisis to solve the problem of systemically important financial institutions being "too big to fail", prevent and resolve systemic risks, and from the perspective of top-level design, it puts forward targeted policy recommendations for our regulatory authorities to learn lessons from western countries and strengthen the supervision of systemically important institutions.
1、 The historical context of the evolution of the "big but not fail" policy: an analysis based on the United States
As the largest financial market in the world and the birthplace of the practice of "big but not falling", the development of the US financial industry in recent years has provided rich materials for the study of the evolution of the problem of "big but not falling". In general, the evolution of the problem of "big without fail" in the United States has gone through the following five stages:
（1） The establishment of the policy of "large but not collapsing"
The establishment of the policy of "large but not collapsing" began in 1984 with the rescue of the Bank of Illinois, the seventh largest deposit bank in the United States. In order to get the mainland Illinois Bank out of trouble. The Federal Reserve provided large-scale liquidity assistance, and the bank obtained debt guarantee support provided by the Federal Deposit Insurance Corporation in accordance with the Federal Deposit Insurance Act of 1950, that is, to cover all deposits of the bank.
The above policies have caused great controversy. Opponents believe that there are the following problems in the practice of the theoretically "big but not fail" policy: First, it will cause serious moral hazard. On the one hand, it encourages big banks to engage in greater risk-taking activities. Because the policy of "big but not failing" provides a kind of implicit guarantee that big banks will not fail no matter what degree of risk activities they engage in. On the other hand, the moral hazard of "big but not failing" is also reflected in providing implicit guarantee for depositors' deposit security. Make depositors abandon the idea of supervising banks and encourage banks to have the opportunity to gamble unilaterally. Second, "big but not failing" will lead to unequal competition between big banks and small banks. Due to the guarantee of "big but not failing", large banks can engage in greater risk activities than small banks, and thus may obtain greater benefits. Hint to depositors and creditors that large banks will not fail, and can also attract more deposits at a lower cost.
（2） A Preliminary Amendment to the "Big but Never Collapse" Policy -- The passing of the Federal Deposit Insurance Corporation Enhancement Act in 1991
In order to limit the moral hazard that may arise from the "big but not fail" policy and control the rescue cost, the United States Congress passed the Federal Deposit Insurance Enhancement Act in 1991. First, it stipulated that the rescue of existing banks and the disposal of problem banks must comply with the requirements of the "lowest cost" principle, and specified the lowest cost disposal procedures in detail. The second is to establish a special resolution mechanism for commercial banks and authorize the Federal Deposit Insurance Corporation to implement this mechanism. However, until the 2008 financial crisis, this mechanism was not used in dealing with "big but not failing" financial institutions. The theorists generally believe that the Federal Deposit Insurance Corporation Enhancement Act is not thorough in correcting the policy of "big but not failing". In 1997, the then chairman of the Minneapolis Federal Reserve suggested that the legislation should be further revised, the loss sharing mechanism should be introduced, and the rescue of large banks should be clarified, Depositors and other creditors can only determine the amount of compensation payment based on 80% of the face value of the creditor's rights or the market price at that time, whichever is higher.
（3） Breakthrough in the scope of "large but not collapsing" - 1998 rescue of long-term capital management companies
In 1998, the famous American hedge fund Long Term Capital Management Company (LTCM) had a liquidity crisis. Due to the high leverage ratio of the fund, the large scale of derivatives positions, and many counterparties, the New York Federal Reserve was forced to launch the main creditor banks of LTCM to rescue the long-term capital management company in order to avoid systemic financial risks. This practice has broadened the scope of application of the policy of "big but not falling" in practice. It has expanded its scope from banks to non bank financial institutions, and has theoretically expanded the new dimension of understanding the "big but not fail" policy. Since the capital scale at the time of the crisis did not exceed $5 billion, the long-term capital management company itself was not large. However, as a major dealer in a series of derivatives markets and a close counterparty relationship with a number of commercial banks and investment banks, they can only sell a large number of assets in the face of their own liquidity crisis. The regulatory authorities believe that if they are allowed to go bankrupt, it will lead to a chain reaction of the entire financial system and bring catastrophic consequences. This phenomenon is called "too related to fail".
There has been a huge controversy over the New York Fed's rescue of LTCM. Opponents believe that it is unreasonable to use public resources to rescue a private hedge fund that pursues high profits and bears high risks, and that unlimited expansion of the coverage of the financial safety net will further increase moral hazard. The Federal Reserve and senior banking managers explained this query: First, the fear of causing systemic risks in the financial market is the main reason for the Federal Reserve to take action; Second, the Federal Reserve only intervened indirectly, acting as an "honest broker" in the rescue process, and did not discuss the contract terms and rescue conditions with the creditors of long-term capital management companies..
（4） Full implementation and test of the "big but not collapsing" policy I Financial crisis in 2007-2009
In the process of responding to the financial crisis in 2007-2009, the U.S. regulatory authorities experienced ups and downs in using the "big but not collapsing" policy to rescue financial institutions: from the dispute caused by the rescue of investment bank Bear Stearns in March 2008 to the global financial crisis triggered by the bankruptcy of Lehman Brothers in September 2008, and then used the Troubled Asset Recovery Program (TARP) Fund and other large-scale rescue of large financial institutions. On the one hand, the effectiveness of the "big but not failing" policy in preventing and controlling financial risks is highlighted in the negative form (the bankruptcy of Lehman Brothers triggered the global financial crisis): on the other hand. The large-scale rescue of private financial institutions has exposed the government to a huge fiscal deficit, which may lead to debt risks: while the practice of financial institutions receiving rescue continued to pay huge bonuses to their executives, while infuriating the public, it fully exposed the inherent defects of the "big but not fail" policy that triggered and encouraged moral risks.
（5） Comprehensive reflection after the crisis
After the financial crisis, the United States launched a reflection on the crisis and the "big but not collapse" rescue measures. First, in terms of the scope of policy application, this financial crisis shows that. "Big but not fail" may not only appear in the field of traditional banking. In today's highly connected financial markets and increasingly complex financial products, non bank financial institutions such as investment banks, insurance companies, hedge funds and even non financial institutions in developed markets have the risk of bankruptcy and require assistance. Second, there are a series of serious hazards in the unconditional rescue of large financial institutions without restrictions: first, the existence of the above institutions weakens the motivation of prudent risk management, while creating a large number of contingent liabilities for the government, thus amplifying the systemic risk; Second, the existence of large but unswerving institutions will distort the competitive relationship in the financial industry. Compared with small banks, banks with assets of more than $100 billion in the United States enjoy at least 70 basis points in terms of financing costs; Third, the treatment of large but not failing institutions has reduced the public's trust in fair competition in the financial system.
In general, the evolution of the "big but not collapsing" problem in the United States has the following characteristics: First, it is closely linked with the changes in the industrial structure of the U.S. financial industry, especially the banking industry. Since the 1970s, it has gradually broken through the principle of separate operation established in the 1933 Banking Act The trend towards mixed operation has greatly promoted the scale expansion of large banks. Second, the scope of application in practice has gradually expanded from 11 large deposit banks to investment banks, insurance companies
Non bank financial institutions such as hedge funds; Third, the meaning is increasingly rich, from judging the degree of harmfulness purely based on scale to comprehensively considering multiple factors such as relevance, substitutability and complexity; Fourth, the negative effects of the "big but not failing" policy, such as high rescue costs and excessive moral hazard, have become increasingly prominent. It is urgent to take a comprehensive package of policy measures to solve the "big but not failing" problem of financial institutions.
2、 Solutions to the problem of "big but not falling" after the crisis
（1） Recommendations of international organizations
At the international level, the Post Crisis Financial Stability Council and the Basel Committee actively promote the research on the regulatory policies of systemically important financial institutions (hereinafter referred to as SIFIs). The Basel Committee believes that the supervision of SIFIs has four main objectives: first, to reduce the possibility of bankruptcy; The second is to reduce the scale and impact of negative externalities. The third is to reduce the input of public funds and the burden of taxpayers caused by government assistance; The fourth is to maintain fair market competition and prevent systemically important institutions from taking advantage of their "too big to fail" position to obtain unfair benefits. After nearly two years of discussions, the Basel Committee and the Financial Stability Council initially developed a methodology for identifying and evaluating SIFIs, and proposed a series of policy tools to strengthen the supervision of SIFIs. October 20, 2010. The Financial Stability Council (FSC) presented the report of Policy Recommendations and Timetable for Reducing Moral Hazard of Systemically Important Financial Institutions, and initially proposed the overall policy framework and relevant specific recommendations for strengthening SIFIs supervision and solving the problem of "big but not falling".
1. It is required that systemically important institutions should have higher loss absorption capacity.
The Financial Stability Council proposed that systemically important financial institutions should have high loss absorption capacity, including requiring banks to use capital surcharges or emergency capital or self-help debt instruments and other capital or other instruments that can be used to improve their ability to withstand losses. At present, the Financial Stability Council and the Basel Committee have basically reached a consensus to implement additional capital requirements for systemically important financial institutions. The Financial Stability Council also proposed that governments could consider using other policy tools to strengthen the supervision of SIFIs, including liquidity surcharge, large risk exposure limits, financial institution taxes and structural measures.
2. Strengthen the supervision of systemically important institutions.
On November 1, 2010, the Financial Stability Council put forward 32 suggestions on how to improve the intensity and effectiveness of supervision of systemically important financial institutions (hereinafter referred to as the "Recommendations"). The basic principle is that the regulatory authorities of member countries should have the right to adopt differentiated regulatory requirements and intensity according to the risk impact of systemically important institutions on the financial system. The recommendations are specifically divided into four parts. First, the regulatory authority is required to have appropriate authorization, independence and resources to take independent regulatory actions and obtain sufficient regulatory resources (quantity and quality) to ensure the effectiveness of regulatory actions. The second is to have an appropriate mechanism to identify risks as soon as possible and take intervention measures to correct and prevent unsafe and unsound business behaviors of systemically important institutions. The third is to improve regulatory standards. Improve regulatory methods. The regulatory standards should reflect the increasing complexity of the financial system and financial institutions, and more stringent regulatory techniques should be applied to SIFIs. The fourth is to establish a stricter evaluation mechanism. The evaluators will implement the evaluation according to the revised stricter and more relevant regulatory standards, promote regulators to improve their work quality, warn of possible problems in their regulatory process, and ultimately improve the effectiveness of international supervision of systemically important institutions.
3. Policy framework for the effective disposal of systemically important institutions.
The Financial Stability Council pointed out that member countries should establish a policy framework for institutions that are systemically important for effective resolution, which mainly includes three aspects: first, establish a comprehensive resolution system and resolution tools. To this end, Member States should promote legal reform. Ensure the effective disposal of systemically important institutions without using financial funds, and maintain the normal operation of key functions of systemically important institutions by establishing a mechanism for shareholders and creditors to absorb losses in order; A special resolution authority should be designated to deal with problematic financial institutions, and relevant institutions should have the power and tools recommended by the FSB to perform their duties; At the same time, we should also consider establishing a restructuring mechanism based on the bail in mechanism. The second is to establish an effective cross-border resolution coordination mechanism. The authorities responsible for the resolution of financial institutions in Member States should actively seek cooperation with the resolution authorities of other countries, and should be empowered by law to cooperate with foreign authorities and share information. There should be no legal provisions in the laws of Member States that affect cross-border resolution, such as giving domestic depositors priority over foreign branch depositors: taking formal intervention, disposal or commencement of insolvency proceedings by the regulatory authorities of other countries as the trigger for domestic actions, and acting alone in the absence of effective cooperation and information sharing. The third is to establish effective recovery and resolution plans (RRPs). Relevant regulatory authorities should have the right to require financial institutions to adjust their legal and operational structures and business practices to ensure the effective implementation of recovery and resolution plans. The host country should take resolvability as an important consideration when deciding whether to allow relevant financial institutions to open branches, establish subsidiaries and whether to require relevant institutions to adjust their business methods.
（2） Policies and programmes of major countries
1. United States.
(1) Regulatory requirements for systemically important institutions.
The U.S. Financial Regulatory Reform Act passed in 2010 requires to improve the prudential supervision standards for systemically important banks and bank holding companies with assets of more than 50 billion dollars. The new regulatory standards must include the following: risk-based capital and leverage ratio requirements, liquidity regulatory requirements, comprehensive risk management requirements Concentration restrictions (such as restrictions on credit exposure to any single entity), stress test requirements, rapid resolution requirements, resolution plans (living wills) and credit exposure reporting requirements. On this basis, the regulatory authority can consider implementing the following restrictive measures as needed: contingent capital requirements, higher public disclosure requirements, short-term debt limits, other prudential supervision standards proposed by the Federal Reserve or the Financial Stability Supervision Committee.
(2) Organizational structure supervision measures.
In terms of organizational structure. The "Volcker" rule established by the US Financial Regulatory Reform Act has established the following three regulatory requirements: first, it restricts proprietary trading, but does not completely prohibit proprietary trading. Instead, it allows commercial banks to engage in proprietary trading for "market making, risk hedging and promoting customer relations", and can retain derivative transactions such as interest rates and foreign exchange swaps; Second, comprehensive operation is restricted, but commercial banks are not fully prohibited from investing in hedge funds and private equity funds, and banks are allowed to invest no more than 3% of tier one capital in hedge funds and private equity funds. And the investment in each fund shall not exceed 3% of the capital raised by the fund. The third is the restrictive provisions on asset concentration, that is, after a financial company merges with other financial enterprises, if its total consolidated liabilities exceed 10% of the total liabilities of all financial companies, it is not allowed to carry out this merger.
(3) Establish an orderly liquidation mechanism to end the "big but not failing".
The United States Financial Regulatory Reform Act grants the government the right to take over large financial institutions that are about to collapse in an emergency, and the government has the right to split and sell the assets of large financial institutions. On the basis of the original provisions on bank bankruptcy liquidation, the government supervision department is empowered to carry out bankruptcy liquidation for large non bank financial institutions and adopt safe and orderly bankruptcy liquidation procedures for them; The Federal Deposit Insurance Corporation and the Federal Reserve are responsible for the bankruptcy liquidation of banks, the Securities and Exchange Commission or the Federal Reserve is responsible for the bankruptcy liquidation of broker dealers, and the Federal Insurance Office or the Federal Reserve is responsible for the bankruptcy liquidation of insurance companies. At the same time, the bill stipulates that only with the consent of the Ministry of Finance, the Federal Deposit Insurance Corporation and the Federal Reserve can large financial institutions be placed under bankruptcy proceedings.
2. UK.
In April 2011, the Independent Banking Commission of the United Kingdom released the interim report "Banking Reform Options", which pointed out that in order to control the negative effects caused by the problem of "too big to fail", systemically important banks should be required to have a higher loss absorption capacity and, or a simpler and safer structure. At the same time, the Committee pointed out that the most effective way is to establish a moderate and appropriate policy mix combining loss absorption capacity with structural measures.
The Committee pointed out that in order to improve the loss absorption capacity, the following preconditions should be made clear: first, banks should be required to hold more capital; second, it should be made clear that creditors, rather than taxpayers, should bear losses in the event of bank losses. Based on the above considerations. The Committee believes that the capital requirement of all systemically important banks operating in the UK should not be less than 10%, and their capital composition includes equity and debt instruments with loss absorption capacity. About the rescue tools in crisis. The Committee believes that both emergency capital and self-help debt instruments can improve the loss absorption capacity of banks, thus helping to realize loss sharing without going into bankruptcy proceedings. This facilitates the orderly and effective disposal of failed problem banks and controls the scale of collateral losses. At the same time, placing the depositor's repayment order before other unsecured creditors is also conducive to improving the loss absorption capacity and the stability of bank operations.
With regard to structural reform, the Committee believes that different banking businesses have risks, but they pose different policy challenges. For key banking services, retail customers have no effective alternative, so measures must be taken to avoid system imbalance and ensure its continuous operation. On the contrary, customers of wholesale banks and investment banks generally have more choices and are more capable of self-protection. Therefore, it is necessary to separate retail banking from wholesale and investment banking in an appropriate way.
3. Switzerland.
(1) More stringent capital requirements.
According to the final plan of the Swiss Financial Regulatory Commission, first, based on the balance sheet size and relevant market share, the capital adequacy ratio of Credit Suisse and Bank of Switzerland under the third version of Basel Accord is 19% of risk weighted assets. Second, more than 10% of risk weighted assets must be held in the form of common shares. Including paid in capital, disclosed reserves and retained earnings after corresponding regulatory deductions. Third, part of the capital buffer (up to 3% of risk weighted assets) and progressive capital can be held in the form of convertible bonds. When the proportion of common shares of the two banks mentioned above falls below the predetermined standard, they can be automatically converted into capital stock.
(2) Regulatory requirements on organizational structure.
Considering that the regulatory measures on the organizational structure of banks will significantly interfere with the economic freedom of market players, the Swiss Financial Supervisory Commission emphasizes that the setting of regulatory measures should follow the principle of subsidiarity, that is, each systemically important bank has the obligation to ensure that its organizational structure can continue to play a systemically important role in a crisis. On the contrary, if a bank cannot prove its ability to maintain the importance of the system, the regulatory authority will order the bank to take necessary structural adjustment measures.
In specific policy practice, the impact of capital and organizational structure supervision measures should be considered together. If the capital ratio of systemically important banks is below a certain level. The emergency plan will be triggered, and the system importance will be transferred to the new legal entity in a short time, so as to ensure that the emergency plan can be implemented on a more adequate capital basis. If the bank exceeds the minimum organizational structure requirements and thus improves its resolvability, it will be rewarded for reducing the progressive capital requirements.
To sum up, the main policy objectives of international organizations and national regulatory authorities are to address the systemic risks brought about by financial institutions that are "too big to fail", restore market constraints and reduce moral hazard. The main measures include: first, establishing effective resolution mechanisms and procedures to ensure that problematic large financial institutions can be disposed of safely and quickly; Second, large financial institutions should have a higher loss absorption capacity. Third, we should strengthen the supervision of large financial institutions; Fourth, strengthen financial infrastructure to reduce risk contagion; Fifth, other regulatory measures that national regulatory authorities deem necessary.
3、 Policy suggestions on strengthening the supervision of systemically important institutions in China and solving the problem of "large but not collapsing"
（1） Strengthen corporate governance and risk management of systemically important banks, and consolidate the regulatory foundation
China's regulatory authorities should combine the new relevant international standards on corporate governance and risk management issued by the Basel Committee on Banking Supervision with China's banking regulatory practices to put forward higher regulatory requirements on corporate governance and risk management of systemically important banks Clear regulatory requirements are put forward for the construction of information management system and improper transactions inside and outside the Group. At the same time, strengthen the supervision and inspection of the qualification review of directors and senior executives of systemically important banks and the due diligence of the board of directors, and promote commercial banks to improve corporate governance and risk management.
（2） Carry out both ex ante structural restrictions and ex post cost supervision to improve the regulatory standards of systemically important banks
To strengthen the supervision of systemically important banks, we should not only prevent the banks from being too large, too complex and too risk related through ex ante structural restriction measures, but also control the risk level of banks and improve their risk resistance ability through ex post risk supervision and capital requirements. The regulatory authorities should continue to adhere to the principle of effective market isolation and promote the construction of firewalls. Prevent cross market risk transmission; Prudently promote comprehensive operation, strictly conduct access approval and post evaluation, and effectively control the risks of cross industry operation: actively improve structural preventive supervision measures, limit the development of high-risk businesses and strengthen the supervision of financial innovation according to the level of risk, and control the complexity and relevance of systemically important banks; At the same time, more stringent capital, liquidity and large amount risk exposure requirements are put forward for systemically important banks to control their risks at an affordable level and improve their risk resistance and offset capabilities.
Chapter 9: Model Articles on Policy Risks of Financial Institutions
1.1 Adjust economic structure according to the development law of market economy
China's economic system has completely changed from a planned economy to a market economy. The characteristics of the economy itself, that is, the inevitability of financial risks, have become a problem that must be paid attention to in the current economic development. Although macro-control policies and the state's control of important economic lifelines can reduce or delay the arrival of financial risks, However, the health of market economic institutions is the key to avoiding financial risks. The more sound the economic structure is, the greater the role of money circulating in the market will play, and the lower the possibility of payment crisis. The development of market economy has its own regularity, which provides the direction for the overall adjustment of China's economic structure. The balanced development of industrial structure is the prerequisite for the rapid and healthy development of market economy. Therefore, optimizing the industrial structure and enhancing the effect of macro-control is the first strategy to avoid financial risks. The strategy of industrial concentration and transfer currently adopted by China is a manifestation of the optimization of industrial structure. In 2010, the State Council issued the opinion that the central and western regions are lower than the ones that undertake industrial transfer, fundamentally changing the economic structure of the southeast coastal areas and the central and western regions. This is a comprehensive application of fiscal policy, industrial policy, regional policy and necessary administrative means while the government uses monetary policy, The strategy of seeking coordinated development of the national economy to prevent financial risks; Improving the purchasing power of RMB and promoting consumption is the second financial risk prevention and avoidance strategy adopted by China, which is specifically reflected in the continuous coordination of resource allocation between the local government and the central government to guide the improvement of social consumption capacity by adjusting the direction of fiscal expenditure. For example, the state gives certain subsidies and preferential policies to energy saving and emission reduction appliances and vehicles, guides citizens' consumption direction and level, increases the investment of social security resources, makes citizens more willing to use their wealth for social insurance purchase, controls housing prices, and constantly adjusts citizens' housing purchase standards according to the real estate operation status and housing loans received by banks, Stimulate the need.
1.2 Strengthen supervision of financial industry activities
Financial risks are inextricably linked to the development of the financial industry itself. The systematic characteristics of the financial industry determine that once one or several large banks and trust institutions in the industry break the capital chain, it will directly lead to regional or national financial crisis. Due to the financial trade between countries, the financial crisis will expand to the world. In addition to the financial risks caused by the imbalance of economic structure, the out of control, loopholes and weakness of bank supervision have made bank speculation enter the market and become the trigger of the crisis. This means that strengthening the supervision of financial industry activities is the key to prevent and control risks. Internal control is the basis of preventing and resolving bank risks. Strengthening internal control is a necessary precautionary measure taken by the banking industry itself in the current situation of emerging operational risks. First, under the condition of fully identifying risks, establish a systematic and perfect internal control system and a system defense line according to the risk links in the business processing process; The second is to establish a relatively independent internal control mechanism from top to bottom so that it can fully exercise its supervision power to achieve the necessary supervision effect; Third, strengthen the punishment of violations to achieve the effect of punishing one person and warning one; Fourth, strengthen follow-up inspection, incorporate daily business operation and daily business supervision into the scope of inspection, and make inspection institutionalized and regular. The activities of the financial industry face the whole society. Therefore, in addition to internal control, it is also extremely necessary to strengthen the government's management of the financial industry and establish a social supervision system. The state can further control violations in the financial industry by improving financial laws and regulations, conducting irregular inspection of accounting information and other methods; Citizens can supervise financial activities by reporting bank information and evaluating bank reputation.
1.3 Improve the environment for economic development
Finance is an industry attached to the commodity economy. It is generated in the development process of commodity economy and develops with the development of commodity economy. The structure, scale and stage of economic development determine the business structure, overall scale and advanced level of the financial industry. Therefore, a stable and healthy national economic environment is particularly important for preventing and resolving financial risks. Citizens' participation in the development of the social financial industry builds a solid fortress for financial risk aversion. The funds from society are used intensively, thus forming the value recreation of social idle funds, thus increasing the national capital reserve and enabling the country to have more funds for economic restructuring. Therefore, enriching financial products, improving financial technology and improving financial services are effective strategies for financial risk prevention. China's commercial banks continue to innovate financial products. The development of online finance also provides support for the progress of modern financial services. Citizens can not only meet their own wealth appreciation needs through the purchase of various financial products, It can also have more funds to meet the needs of life, thus forming a balanced development of the domestic economic environment, which is the initiative of the financial industry to take measures to avoid risks and optimize the economic development environment; The establishment of the global economic situation has made the economic environment development face the challenge from foreign capital injection. At the same time, foreign capital injection has also become a driving force for China's economic development. Balancing the balance of international trade and making the global economic situation a favorable background for the development of China's economic environment is one of the current measures to improve the national economic development environment. China's current measures include industrial investment abroad, such as the transnational development of the oil industry, and also include the optimization of conditions for the introduction of foreign capital and technology, such as the establishment of the Shanghai Free Trade Zone. These actions have created favorable conditions for international financial exchanges and provided necessary resources for the development of China's economic environment.
1.4 Improve the risk resistance of the financial industry
The impact of the outbreak of the financial crisis on different countries is completely different. The latest financial crisis has hit western countries seriously, while the United States and Germany have been able to get out of the financial crisis quickly. With little difference in economic structure, financial industry activity supervision, and economic environment, these countries can recover quickly from the financial crisis, The risk reduction to the greatest extent depends on the improvement of the risk resistance ability of the domestic financial industry itself. Compared with other countries, the financial industry in the United States and Germany has developed more scientifically, which provides a reference for China to prevent and control financial crises, that is, to promote the reform of banks themselves through market economic behavior and certain national policies, so as to adapt to the laws of banks and the trend of bank globalization, which is the basis for preventing and resolving bank risks. The reform of China's financial industry can start from the following two aspects: first, speed up the commercialization process of state-owned banks, make state-owned banks take an absolute leadership position in the development of the financial industry, and learn from the organizational model of commercial banks to promote the reform of the internal organizational structure and management behavior of banks with a scientific and democratic management model, Such reform measures can enable the state-owned banks to quickly adjust their own development strategies, so that the internal managers and financial staff of the banks can give full play to their own work enthusiasm, and promote the improvement of the banks' own strength; Second, strengthen the professional ability of the bank's internal staff, develop the bank's own research ability on financial crisis, provide more and more effective suggestions for financial risk avoidance through the participation of economic research, and then prevent and control financial risks from the adjustment of the financial industry's own operation process.
2. Precautions in preventing and controlling financial risks
Although the financial industry and the economy have systematic characteristics, the financial crisis that broke out in the same period has different impacts in different regions. Countries, local governments and financial institutions that can take the initiative to prevent and deal with financial crises quickly are all based on an objective understanding of financial risks. Therefore, in order to effectively prevent and control financial risks, both the government and the financial industry and enterprises should take the initiative to master relevant information to provide a basis for risk expectations; In addition, financial risks have different manifestations in different regions, and their harm is also different. The financial industry and local governments should take appropriate preventive measures according to the regional economic development, make rational use of resources, and respond to risks with a targeted view.
3. Conclusion
