Financial Instability And Macro-prudential Supervision

Worldwide, the development of the financial sector and real economy, more andmore inseparable, interdependent, but also the interaction. Financial system has longbeen inherent instability of macroeconomic cause greater losses. This instability comesfrom the fluctuations of the economic cycle, would be counterproductive in the realeconomy, financial systemic risks continue to accumulate, and eventually inevitable thatthe outbreak of financial crisis. In this process, the traditional micro-prudentialsupervision philosophy is only concerned about the safety of micro-finance institutionshave been enough to cope with the different from the traditional characteristics of thesystemic risk impact. After the financial crisis in the United States, academia andmanagement a profound reflection of the significant regulatory issues, regulatory visionturned to financial systemic risk, and financial pro-cyclicality in-depth review.Macro-prudential supervision into a universal concern, get the same recognition in theeffective prevention of financial crisis, maintaining overall financial stability.Research ideas in this dissertation will explore the theory on the basis of financialinstability in the financial sector, as well as pro-cyclicality of the financial regulation inorder to study the counter-cyclical macro-prudential framework. This study need to makeefforts to solve problems are mainly three:1, the principle of financial instability andhow?2, the financial instability of governance programs evolve to macro-prudentialregulatory framework?3, in the process of China’s financial development should be howto practice the financial macro-prudential principles and promote the healthydevelopment of the financial sector? In this study, first of all to sort out the financialinstability hypothesis and the financial system procyclicality theory. And to observe suchfeatures in the context of the financial crisis is how evolution. Followed by sub-primemortgage crisis analysis for the sector to explore the concept of financial instability,governance changes, sort out the analysis of macro-prudential supervision theory andpractice. Finally, combined with lessons learned abroad, China’s financial regulatorypractice, to build China’s macro-prudential regulatory framework for recommendations.Around financial instability, financial fragility and financial stability of theseconcepts have had a lot of research, scholars this has been a lot of angle analysis, thefinal will undoubtedly fall on how to co-national force to build a financial stabilityframework. subprime mortgage crises give rise to a new way of thinking, and suddenlyfound that the existing regulatory system is already weak, new macro-prudentialsupervision concepts and frameworks have emerged. Understanding the macro-prudentialsupervision must be traced back to the inherent principle of financial instability, which isa feature of the financial system, but also a series of phenomena, as well as a powerfulfactor affecting the real economy. Demonstrated along the entire financial system offinancial instability from periodic, asymmetric information and capital flows and otherfactors, which pro-cyclical is an important factor, the result is the accumulation ofsystemic risks and the outbreak of, and ultimately affect the entity economic and even social stability. Especially since the subprime mortgage crisis, the financial instability ofthe performance, enhance the impact of capital flows, financial pro-cyclical effect tohighlight the focus on the outbreak of systemic risk, has a new feature of the facts and theconduction of financial instability can be seen The path to this end, national regulatorshave carried out a profound reflection and adopted a series of reform measures, whichreached the consensus is that the need to establish a full range of macro-prudentialregulatory framework. Macro-prudential supervision in the post-crisis financial systemremains fragile, the context of regulatory reform voices loud and clear, can be summedup, mainly in the high hopes for solving the two problems: First, to guard againstsystemic risk into the regulatory objectives, the second is to eliminate or reduce theprocyclicality of the financial system and financial supervision. These were previouslylacking by the micro-prudential supervision, macro-prudential supervision regulatorypurposes, means and mechanisms are very different, but in the new regulatory framework,combined with micro-prudential supervision, and with each other to make up, to form afull range of effective monitoring system of. Regulatory means of macro-prudentialframework, respectively, from the time dimension and the cross-sectional dimension toarrange the policy mechanisms, and focus on micro-prudential supervision and monetarypolicy, co-ordination, to take against the cyclical tool, can be divided into two majoraspects of the capital class, and mechanisms. In addition, the financial early-warningmechanism is a very important part, responsible for monitoring and analysis of systemicrisk, short, the paper analyzes that the macro-prudential supervision into the formation ofa new financial stability framework, in conjunction with the original control policy andregulatory tools can larger enhanced supervision and effect, and the financial sector moreclosely combined with the real economy, and reduce its negative impacts.For my country, the stage and the path of financial development in western countriesthere are even more different, for now, China’s overall financial instability factors arerecessive, financial institutions and market development is relatively stable, sub-Themortgage crisis has not a serious impact on China. However, this does not mean thatChina’s financial development is healthy, perfect, can not be said that China’s financialsupervision is perfect. The analysis shows that China’s financial instability factor is theexistence of financial regulation also showed many problems."12th Five-Year Plan alsoclearly put forward, to build a financial counter-cyclical macro-prudential managementsystem framework, which is of great significance. Specific operations, this articlesuggests, we must combine our practice, and strengthen the monitoring and analysis ofsystemic risk, the establishment of sound financial regulatory regime and a wealth ofregulatory tools to start.