Risks Of Trade In Carbon Finance And Their Preventions And Controls

The rapid development of carbon finance also led to the generation of its traderisk. Due to the complexity of the subject and content of carbon finance transaction,the transaction volume leverage, the intertemporal nature of the trading hours,uncertainties of trading results, and other features. The trade of the carbon financeare more complex and difficult to control than other financial risks. These risksmay not only cause losses of carbon finance transaction participants, but may alsolead to the macro body, including the overall social and economic turmoil.Firstly, on the basis of the original risk theory, we divide the carbon financetrade risks into policy risk, credit risk, operational risk, market risk, liquidity riskand project risk,we analyze their features and content. More important is we focuson the measures and assessment methods of each risk, such as the modernmeasurement model of credit risk, VaR model of the market risk,the constructionof the indicators of liquidity risk-adjusted model.We inspect the United Kingdom,Japan, the EU’s carbon finance policy arrangements and their prevention and controlpractices in the aspects of carbon finance trade,the same as the World Bank,international financial organizations, the internationally renowned commercial banks.Finally, on the basis of earlier studies in this article, we put forwardcountermeasures and suggestions of our country in the risk prevention and controlof carbon finance transactions from the perspective of governments and financialinstitutions. Financial institutions should actively establish appropriate institutionaland mechanisms to prevent the transaction risk. Government should provideguidance and unified standards for financial institutions on risk prevention and control of carbon finance transactions and strengthen the construction of the carbonfinance intermediation services support.This article belongs to the application of theoretical studies of carbon finance,the combination of qualitative and quantitative study in this article has strongpractical significance for China’s development of carbon finance, in particular,provides an important reference is the prevention of carbon finance transaction risk.