| Since the outbreak of the 2007 financial crisis, issues including international financial regulation, economic growth, etc have been awared by people involved. One of the important points is the need for financial regulation reform and through reforms to reduce the probability of financial crisis and its negative externalities after outbreak. According to the G20 summit on the requirements of improving financial market transparency and accountability, strengthening supervision, promoting the integrity of financial markets, strengthening international cooperation and performing the reform of the international financial institutions, Basel Committee together with other international financial organizations began to conduct a study on regulatory reform, and in December 2009 tentatively formed a framework. After revise, the framework was finally accepted by the G20 central bank governors and regulators summit in September 2010. This is the background of the birth of Baselâ…¢. Different with the Baselâ… &â…¡,in addition to further strengthening the micro-prudential supervision, Baselâ…¢emphasis more on the design of related supervision ideas and tools from macro-prudential aspect. This is because the financial crisis brought profound lesson:the soundness and healthy of a single financial institution can not assure the soundness and healthy of the whole financial system. Financial bubbles completely divorced from the needs of the real economy will finally rupture and have bad effects on the whole financial system and the real economy. So, financial regulation needs to pay close attention to preventing and eliminating systemic risk from a more macro level.From the point of view of the historical development, before the establishment of Basel Committee, banks already have a macro-prudential supervision tradition. This is reflected from monopoly on the issuing of currency, playing role as last lender by central banks, and the establishment of separate supervision system represented by the United States after 1933. It also establishes the dual goals of fair competition and financial stability at the beginning of Basel Committee. It hopes to achieve the above objectives through enhancing international regulatory cooperation, improving the effectiveness of supervision technology and unifying of regulatory standards among different countries. Taking into account of national sovereignty and country-specific circumstances, Basel Committee also entrusted regulatory authority a lot of free options in each country. From the results, monitoring technology and regulatory standards are universally recognized by all countries, however, it is unsatisfactory for strengthening cooperation in the regulation. The reason of which is that the regulatory cooperation must be based on overall cooperation among countries, involving many aspects, the difficulty of implementation is far greater than the sole monitoring and promoting of techniques and standards. In any case, by promoting monitoring technology, integrating regulatory standards and carrying out regulatory cooperation, the Basel Committee has not only promoted the individual countries for micro-prudential regulation of financial institutions, but also promoted different countries for systemic financial risk management to some extent. Therefore, the Basel Committee has achieved great success.From comparison among Baselâ… ,â…¡,â…¢, the contribution of Baselâ… lies in its propose of the concept and method of risk assets and risk weighted assets, and Basel III decided the minimum capital requirement of 8%. This made it possible for different banks and different branches of business in banks can compare with each other through this concept and method, which promoted the unifying of regulatory standards and fair competition. The weakness in Basel I is, in the aspect of determine the method of the weight of risky assets, it leans too much on developed countries, and at the same time it has only five ranges in setting of the weight of risky assets which is not so sensitive to risks and is not conducive to encourage banks to improve risk management techniques. The contribution of Basel II lies in its propose of the three pillars of bank capital regulation, Basel II made it clear that capital shall cover the three major risks of credit, market and operation,'and developed three ways for credit risk and operational risk rating. The weakness in Basel II is that after rising the sensitivity of capital adequacy ratio, the procyclicality problem is more obvious, at the same time it also deserves concern whether capital adequacy ratio can completely cover risk, especially in the standard method of using external ratings as an important basis for risk ratings, which objectively weaken the awareness of self-assessment of risk for financial institutions, increases reliance on external ratings. As with Baselâ…¢, though it is not in effect yet, but it is widely considered that its contribution lies in re-combing, and strengthening supervision of capital in macro-prudential perspective, and introducing institutional regulatory concepts and tools of leverage, liquidity, reverse cycle and systemic important financial institutions(SIFIS), which will improve the level of financial supervision and management of systemic risk. There are also views that capital adequacy requirements in Baselâ…¢are too high, which may cause negative impact on economic growth, especially in emerging market countries. Furthermore, compared with the traditional i ndicators of 1 iquidity regulation, the two indicators of Basel's liquidity coverage and stable ratio of net capital are too complicated, and are not conducive for the performing and promotion in practice. It needs further observation to decide whether there are real influences.As an important notion of Baselâ…¢, there is no uniform definition for macro-prudential supervision. The most widely accepted is the concept by bank of International Settlements, which stresses that macro-prudential supervision is concerned the entire financial system, as well as to strengthen supervision on systemically important institutions, products and markets. Specifically, by adopting counter-cyclical regulatory measures and the additional regulatory measures for global (national) systemic important financial institutions (GSIFIS) to reduce the accumulation of systemic risk in the time dimension and the dissemination in spatial dimension. Most of these measures or tools exist in the supervision of individual financial institutions practice. So, the differences between macro-prudential supervision and micro-prudential supervision lie not in tools but in the differences of focus and perspective. In general, macro-prudential framework includes macro-prudential analysis, macro-prudential tool selection, the coordination of monetary policy and the establishment and improvement for the governance structures of macro-prudential supervision and and so on. But in fact, government finances also plays an important role in macro-prudential supervision, which of the reasons lies on two aspects:on the one hand the financial soundness has direct impact on financial stability and the systemic financial risk level, on the other hand finance will be responsible for any systemic financial risk caused by any reasons. This requires a series of institutional arrangements under the different roles of the Government's finance as public as well as economic agents, which not only ensures the financial stability, but also reduces the possibility of the outbreak of systemic risk and the subsequent responsibility for remedy. From the financial reform after this financial crisis in each country, most countries have set up specialized institutions to take charge of monitoring and evaluation of systemic risks and at the same time coordinate with related supervision agencies, by applying related supervision tools to prevent and defuse systemic risks. In specific regulation, the special emphasis is on the supervision of shadow banks, OTC financial markets and complex derivatives. Further more, in recent years, emerging market countries applied a series of tools in supervision practice, from the current point of view, it belongs to the scope of macro-prudential supervision and achieves fairly good results. It shows that macro-prudential supervision shall also keep step with economic and financial development stage.As an important emerging market country, the influence of the financial crisis on China is not so obvious on the whole, which is because the state-owned commercial banks completed the restructuring and listing in the exchange stock market by introducing strategic investors etc.before the crisis by our government, on the other hand is because we were benefited from the capital controls. But it does not mean its ability of macro-prudential supervision is ahead of the world. Contrarily, while viewing the great potentiality for economic growth in future, socialist political system with Chinese characteristics and the market economic system and in the international political and economic arena, China is gaining greater and greater Rights of Speak and other advantages, we must make it clear that China is in critical period of deepening its financial reform, changing of economic growth. Very important task of preventing systemic risks is lying ahead:The first is, after entering a period of building a moderately prosperous society, the limit to bear systemic risks will be lower and with lesser flexiblity; The second is, there is a very high degree of homogeneity among commercial banks which play a definitely important role in the whole financial system, and risk appetite and risk exposure convergence; The third is, according to "the Twelfth Five-years plan", marketization of interest rate and convertibility of capital account will be promoted steadily. From the functions of financial markets, the ability of diversify risk, optimize resource allocation through innovation of financial products and services is not enough. Consequently we need to handle the relationship in a better way between financial reform and financial stability, as well as the relationship between strengthening macro-prudential regulation, preventing and mitigating risks and encouraging financial innovation, and playing a basic role of market mechanism. According to the inner logic of macro-prudential regulation and the current situation in China, we suggest to set up macro-prudential regulation committee in the State Council level, in responsible of monitoring and evaluation of systemic risks and at the same time coordinate with related supervision agencies. Taking into account of China's economic transition and the characteristics of the financial system, the role of government finance in macro-prudential supervision should be strengthened particularly in this framework. In terms of specific tasks, it needs not only to strengthen systemic risk monitoring and evaluation of systemically important institutions, products and markets but also to strengthen supervision legislation to provide system protect for preventing and defusing systemic financial risks, which is the two basic work of macro-prudential regulation.
|
PDF Full Text Request