From Planning to Control: Achieving Financial Stability through Effective Regulation

Author: Zhou Ziheng, Liu Zhiwei
Publisher:
Publish Date: 2006-10-01
Features: The data sources for the report are concentrated on information released by authoritative departments. The research team examined a series of important cases, drawing on rich research findings from the Shanghai Institute of Finance and Law and other research institutions, as well as the experience of policy practice departments. The report also referenced the latest international research findings. From these diverse sources, the report has formed the following four conclusions or recommendations: There are two reasons for the particular vulnerability of the financial sector in transition economies: planned control has generated numerous financial instability factors; and the liberalization of planned control has introduced new risks. This necessitates stable support from government departments. In addition to administrative planned control, the government has very limited intervention tools, which calls for a more clear legal process to establish a legal environment for financial regulation. Financial legislative activities should promptly transition from institution-based, sectoral regulation to business-based regulation, achieving functional regulation. Enterprises must more actively adapt to the direct and indirect impacts of the formation and changes in the regulatory legal environment.