On The Role Of Central Bank In Financial Stability

driven by the development of economy globalization, financial globalization develops fast. Financial internationalization and globalization accelerate the increasing of economy of the world, but it brings growing complicated factors of financial instability at the same time, which enlarge the financial instability. The frequent happening of financial crisis is the evidence of increasing of financial instability. Thus, the government of each country and the international finance corporation attach importance to the whole stability of financial system. The study of financial stability is becoming the current of the world and an international question for discussion.Viewing from the developing course of central bank, no matter the central bank being charged with the function of financial supervision or not, central bank function of maintaining financial stability is uniform. Under the circumstance of monetary policy function and financial supervision function separated, central bank strengthens the function of financial stability. Nevertheless, what is financial stability? What are the connotations of financial stability? What role does the central bank play in the course of maintaining financial stability? The relative finance law and statute do not give a clear answer of these problems, and there is not a good answer even in theory field. Resolving the above-mentioned problem does not only have the meaning of theory discussion but also help central bank orient its accountability properly during the course of maintaining financial stability and impel central bank's work of financial stability effectively.This article consists following parts.First, definition of relative concepts. The author defines concepts stability and financial stability. Then it compares the concepts between financial stability & bank stability and macro-economy stability and monetary stability. At last ,it presents the great importance of maintaining financial stability.Second, based on the comprehension of financial stability, the author presents the common theory on financial stability, which analyzes the financial stability theory with the views on financial stability of Marxism and the viewpoint of macroeconomics and microeconomics. Through theory analysis, we could realize the fundamental reasons inducing financial instability, which are indelible by itself in financial system. So it's essential introducing finance management of government in the work of maintaining financial stability.Third, the author presents genesis and development of financial stability function of central bank. With the development of central bank, stability has became chief object of every central bank. The financial stability is being worked as one of the aim, which experiences lender of last resort,deposit insurance,financial safety net and comprehensive framework for financial stability mow. In the last phase, the function of maintaining financial stability brings forward higher request, this phase must be based on the measures for maintaining financial stability formerly done by central bank, and emphasize the assessment of financial stability,designing of monetary policy and coordination for financial stability.Fourth, the author presents the financial stability assessment program, mainly on macro and micro prudential index system on assessing financial stability, which is the foundation of assessment of central bank. The author also expounds on the financial stability assessment process. Based on the analysis, it is hoped to promote the establishment of assessment system of our country.Fifth, the author analyzes the relation between the function of financial stability and the designing of monetary policy. First, it presents connection of the monetary policy and financial stability policy, then the relation between financial stability and monetary stability.second; it presents the thoughts of bringing financial stability into the design of monetary policy.Sixth, starting from that central bank must coordinate actively in order to maintain financial stability, it presents the fundamental theories of financial stability coordination, then it detailedly analyzes the coordination between central bank and financial supervision,treasury and international coordination.Seventh, after the theoretic analysis, the author probes into the suggestion of promoting central bank's work of financial stability in china. It presents the factors affecting china's financial stability and the actuality of china's central bank's financial stability work, and then it gives suggestions.The innovative thoughts raised in the author include the following items.First, the author presents a detailed discussion on the definition of financial stability, studies the connotation and character of financial stability, then concludes that financial stability is an estate that one country's financial system could exert it's core function effectively, in this condition, finance assorts with economy,finance institution,finance market and basic establishment of finance could play key role in risk management,payment and settlement, and financial resource collocation. Thus, it's an dynamic concept full of connotation, which embodies the request of optimizing financial resource collocation, the ultimate aim of serving the development of finance.Second, keeping the stability of financial system and currency is two main tasks of modern central bank, the author puts forward that design monetary policy should consider financial stability after the analysis, so that central bank could achieve the financial stability and at the time the currency stability.Third, the author explores into the mechanism of coordination for financial stability and argues that the mechanism should include coordination between central bank and financial supervising institution,coordination between central bank and treasury,international coordination, after that the author presents the detailed content and arrangement of coordination.Fourth, this article inquires about the target system construction of financial stability, and proposes the using of the multi-level synthesis fuzzy assessing method to assess financial stability.Fifth, this article believes that, our current finance system in the overall is stable, but factors affecting financial stability such as economic structure,economy growth way, financial structure and so no still exists in financial system.Since continuously,the People's Bank of China plays a key role in maintaining our financial stability and keeping lookoue finance risk , but also has some problems, like the central bank financial stability function boundary is fuzzy, the corresponding law and regulations flaw, lacking the institutional mechanism of coordination, as well as something about the financial stability foundation work being short of. Facing this kind condition, this article proposes measure suggestion like the consummation of law and regulations system, strengthening the research of monetary policy, the deepening financial system reform and perfecting credit system.Problems left to further study are: First is how to implement the assessment of financial stability into each country, especially china's own assessment program; second is the use of quantitative study and model design in monetary policy design considered financial stability and then applicable to come into the financial stability mode of the monetary policy factor; Third, the central bank's maintaining financial stability framework and the development of specific arrangements should be further studied.