Ruyu Han department of Finance, business School, Hohai University, Nanjing, China. DOI: 10.4236/oalib.1104874 PDFHTML XML 383 downloads 969 views Citations
Since 1980, jae won globalization has gradually end up being the main theme in the international financial field. But at the very same time, jae won security issues have followed. So far, there have been many serious financial situations in the world, impacting the world financial and also economic systems. However, in comparison to China, there has never been a financial situation in the procedure of fostering financial internationalization. The conclusions at home and also abroad make united state wonder: whether financial internationalization is a good or poor for a country’s finances, and if there is no financial openness, there is no financial defense problem. Therefore, this post will discover the general relationship between financial internationalization and also financial defense from the five dimensions of worldwide finance. And it gives equivalent suggestions to China in the process of promoting financial internationalization.
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Financial Internationalization, gaue won Security, Financial hazard
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Han, R. (2018) gaue won Internationalization and also Financial defense Issues. Open accessibility Library Journal, 5, 1-7. Doi: 10.4236/oalib.1104874.
Financial internationalization refers to the state and procedure of the financial activity entity the an economy participating in the financial tasks of an additional economy throughout administrative divisions, or evil versa, the core of i m sorry is “the procedure and state of jae won integration in the world”. The key performance size are funding movements, jae won institutions, business, markets, regulation and the internationalization the currencies. Financial security is regularly intertwined v financial internationalization and is carefully related come financial sovereignty.
Since 1980, the wave of gaue won internationalization has swept the world. V the globalization of finance ending up being the key theme of the international financial field, there have actually been plenty of financial situations in the world. The constant crisis in 1980, the Latin American debt crisis, the 1990 asian financial crisis, and the 2010 us subprime mortgage crisis hit the world financial and also economic systems. However, in comparison to China, since the ascede to the WTO in 2001, the procedure of jae won internationalization has been significantly accelerated, but the financial crisis has never erupted. The gaue won industry has actually increased its advance speed as result of opening up. This provides us wonder why the relationship in between financial internationalization and financial security is exactly what it is. In the future, China will be able to reduce gaue won risks and maintain financial security in the process of cultivating internationalization.
In the following, we will continue from the 4 dimensions of worldwide finance, and allude out in basic terms the major financial security risks and also problems the a country may have under every dimension, and also analyze the route of each measurement that jeopardizes jae won security, v a watch to summarizing the basic relationship between financial internationalization and financial defense <1> .
2. Jae won Internationalization and also Financial Security
2.1. Resources Movement Internationalization and Financial Security
The internationalization the the capital movement leads to suspicion in the direction and scale of funding flows, which is a major hidden hazard to the stability of a country’s financial system. The internationalization that the capital movement gives a great institutional setting for the cost-free entry and exit of capital. This not only makes the transnational deliver of jae won assets and currency substitution an ext convenient, but also increases the probability the a country’s financial system will be assaulted by international hot money. In ~ the very same time, the extreme inflow of foreign resources will break the originally well balanced supply and demand of accumulation in a country’s gaue won market, fueling the development of the heritage price bubble and also seriously distort the country’s financial and also economic structure. In addition, short-lived speculative capital flowing into the nation will conveniently return in the event of a reversal that the economic case in the country or a worsening sector expectation. This perceptible signal of capital flow is very likely to cause financial panic in the residential market, thus triggering capital flight. Under the affect of the “herd effect”, the country’s financial sector will conveniently fall into a liquidity dilemma.
2.2. Financial market Internationalization and Financial protection <2>
The internationalization that a country’s financial market is largely reflected in the integrated breakthrough of domestic and international financial markets. The overseas listing that state-owned enterprises affects the financial security of a country. The big number of residential high-quality enterprises listed overseas may lead to too much internationalization the state-owned enterprises and adversely impact national interests and also financial security. For foreign exchange regulate countries, the abroad listing the domestic-funded enterprises to raise foreign exchange funds will additionally cause a passive increase in domestic money supply, resulting in a decrease in the abnormality of industry interest rates, thereby breaking the equilibrium the the domestic money market and also affecting the security of the country’s financial industry. Moreover, through the improvement of the integration of residential financial markets and international jae won markets, a government can quickly balance its balance the payments v the excess of resources projects through borrowing foreign debts in the challenge of present account deficits. However, irreversible borrowing of foreign debts will certainly accumulate substantial external debt dangers for the domestic economy, and also it is simple to induce a blame crisis. At the exact same time, the promo of the integration that domestic and also foreign gaue won markets has actually strengthened the linkage impact of financial industries in assorted countries. The bad news of overseas financial sectors will quickly spread to the residential financial market, directly reflected in the price fluctuations that financial invest products. In the arising market economies, because of the serious info distortion and asymmetry that the market, the an adverse impact of bad news is regularly magnified, and also even induces the chaos in the domestic financial market.
2.3. Gaue won Regulation Internationalization and Financial Security
In the context of internationalization of gaue won regulation, over there are plenty of hidden concerns around financial security. The internationalization that finance has actually intensified the intricacy of supervision, i m sorry is a major test for a country’s financial supervision ability. First of all, the diversification of jae won instruments and the cross-cutting of company brought around by jae won internationalization are likely to reason a regulatory vacuum for the classic institutional supervision system. At the exact same time, the internationalization of jae won markets gives favorable problems for global speculative resources to strike the financial sector of a country from the “multi-angle” of international exchange, securities and money markets, which substantially increases the an obstacle of pre-regulatory and also post-intervention by the regulation authorities. Moreover, there is a conflict between institutional distinctions in financial supervision and regulatory global cooperation. Since international warm money constantly flows come countries and also regions wherein financial supervision mechanism is reasonably weak, the objective existence of distinctions in gaue won supervision systems in various countries provides a space for “regulatory arbitrage” because that international hot money. Global experience mirrors that it is difficult for individual nations or regions to efficiently monitor cross-border financial activities, and international participation in jae won regulation have to be strengthened. This locations high requirements on the capacity of nationwide regulatory authorities to act in concert.
2.4. Financial organizations Internationalization and Financial Security
The internationalization that financial institutions mainly includes two aspects: “walking in” and “going out” of domestic financial institutions for global operation. Top top the one hand, the visibility of foreign financial institutions may boost the fragility the a country’s gaue won system. In the enthusiasm because that the advent of strategic investors, if the domestic financial organizations are unable to judge the situation, castle will take into consideration the techniques and after-effects of the investment, and the hasty decision to entice investment will not only attain the intended objective of enhancing the corporate administration structure, yet will quickly lead come the outflow of wealth as result of the dispersion of equity. The ns of business autonomy jeopardizes the financial security of a country. In ~ the very same time, the entry of foreign financial establishments weakens the effectiveness of financial policy. ~ above the various other hand, when a residential financial institution goes abroad, the puts itself in a highly uncertain business environment. Today’s internationally complicated political, economic and also military case has forced residential financial organizations that collection up branches overseas to face and bear the operational threats brought around by external environmental turmoil.
3. Countermeasures to resolve International financial Risks
Financial internationalization has brought opportunities to China’s financial industry and economic development, and it has additionally brought about no little impact and also problems that have to be seriously solved. As China’s jae won internationalization deepens, the challenges and also tests will become much more severe. In proceeding the procedure of jae won internationalization, China should proceed native its very own reality, totally absorb international experience and also lessons, and also adhere to the principle of activeness and stability. It have to formulate and implement exactly strategies and strategies to stop disadvantages, alleviate or stop the affect of worldwide finance, and ensure financial defense <3> .
1) carry out a progressive financial internationalization strategy and also steadily promote financial liberalization and also financial sector opening.
With the advance of reform and also opening up, China has actually liberalized some financial markets and also successfully completed exchange price consolidation. In December 1996, the convertibility under the RMB existing account was realized, and also a an essential step in gaue won internationalization to be taken. V the acceleration of China’s opening approximately the external world and also the constant improvement that the degree of economic globalization, it will certainly inevitably require additional liberalization that finance and full opened of gaue won markets. Because the capital market, particularly the securities market, is the key target of worldwide speculative capital shocks, and China’s funding market is lagging behind, the matching financial macro-control and also guidance mechanisms have actually not however been established. Therefore, us must actively and steadily and also prudently and step by action to promote financial liberalization and also capital industry opening in accordance through the competitiveness of residential financial institutions and also the maturity the financial sectors to avoid global financial risks.
2) create a complete financial management and also regulatory mechanism <4> .
China’s gaue won supervision mechanism is imperfect, its supervision is no strict, and its performance is lacking. To a details extent, that has contributed to the emergence and also increase of jae won risks. Financial security has end up being a prominent trouble in China’s economic life. Therefore, we must take the facility and development of financial supervision system and also strengthen financial supervision together the top priority of financial reform. We need to strengthen the main bank’s supervision the finance in accordance v the needs of the market economy, and improve the prevention mechanism, decentralization mechanism and compensation mechanism for gaue won risks. Drawing on international experience, we will establish China’s financial at an early stage warning system and deposit insurance device to advice the legal construction of financial supervision. In check out of the current imbalance in the development of the financial market structure, the Party main Committee should improve the jae won supervision device as quickly as feasible and combine the building of pertinent laws and also regulations. And gradually change the ascendancy of the people with the ascendancy of law, and also we must truly have laws to follow, regulations to follow, legislation enforcement to be strict, and also violations of law.
3) Strengthen global cooperation and coordination, promote the revolutionary and innovation of the global financial system and also the global financial system.
At present, the international financial system and the international financial device are serious unsuited come the requirements of jae won internationalization. In the prevention and resolution the the international financial crisis, over there is no corresponding security and also stability mechanism and also effective means. Therefore, international cooperation and also coordination has come to be a major channel for fixing the global financial crisis. Therefore, China should further strengthen global cooperation and also coordination and also make due contribute to the stabilization of global finance. In ~ the very same time, we should actively advocate and promote worldwide financial reform, establish and improve the international financial system and also international financial device that are compatible v the internationalization of jae won development, and create one institutional basis and mechanism guarantee for resolving and also preventing international financial risks.
4) Standardize the advancement of funding markets and also steadily boost the relationship of direct financing.
Compared with significant international countries, the financing networks of Chinese enterprise are reasonably narrow, and credit risks are excessively focused in banks. Therefore, that is necessary to accelerate advancement and deepen the funding market, increase the financing channels of enterprises, and also establish complete funding market procedure rules as quickly as feasible to expand The dimension of the capital market circulation increases the number and also quantity of noted products. In ~ the same time, the is important to enhance the capability of investor to resist market risks and enhance the market’s ability to restore liquidity, thereby fostering the diversification of asset structure and investment entities in the Chinese financial system, thereby realizing the carry of risk subjects and risk structures. Do the cumulative hazard of poor debts of institutional banks into institutional funding market risks. It cannot be ignored that due to the initial conditions of the initial breakthrough of the stock market, China’s share market has long had actually institutional defects, such together the defects of the listing device (implementation the the approval system, later readjusted to the approval system), and also the delisting system is imperfect. Etc., causing distortion of funding market behavior, blocked details channels, unable to achieve effective reflection and transmission of information, and weakened the capacity of the internal allocation the securities market resources. Therefore, us should enhance the institutionalization that the securities industry as quickly as possible, and build a positive and stable development of the funding market.
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Financial internationalization has end up being an irreversible trend and also feature of people financial development. If China wants to develop, it have to devote chin to the wave of jae won internationalization and exchange the smallest financial security prices for the biggest financial benefits. Therefore, China should additional strengthen worldwide exchanges and cooperation, encourage the reform and development of the international financial system and the worldwide financial system, standardize the capital market, carry out a steady financial internationalization strategy, and steadily encourage financial liberty by establishing a complete financial management and supervision system, to avoid the dangers of jae won internationalization and also strengthen gaue won security.