Market-Dominated Financial System: China's Strategic Choice (China Capital Market Research Report 2005)

Author: Wu Xiaoqiu (Compiler)
Publisher:
Publish Date: 2005-04-01
Features: The author of this book believes that the function of finance will continuously evolve with the upgrading of financial structure, and the core function of finance is not fixed. The modern financial system must not only maintain sufficient liquidity to promote sustained economic growth through the optimal allocation of stock and flow resources, but also possess the ability to maximize the diversification of risks accumulated from economic growth. Additionally, the modern financial system may need to provide residents and investors with the wealth effect of economic growth, meaning it must have the function of preserving and promoting the growth of financial assets at a rate no slower than the rate of economic growth. Such a financial system may have many structural elements and will be profoundly influenced by internal economic factors such as economic scale and development level, industrial structure, and industrial growth models during its evolution. It will also be potentially affected by external environmental factors such as culture, law, and technology. In the design of China's financial system, a developed capital market with good liquidity is essential, and a market-led financial system should be the long-term strategic goal of China's financial system. In a market-led financial system, on one hand, the relationship between money and credit will undergo profound changes, with significant alterations in the connotation of money, the basis and transmission mechanisms of monetary policy implementation. On the other hand, the logic process of financial crises may change, and the impact of financial crises on the economy may be further amplified. Therefore, it is necessary to rethink and redesign macro-control mechanisms and basic approaches to.