The Context Of Globalization, China's Financial Stability Research

The financial stability issue has always been important theoretical topic of financial circle at home and abroad, which presents high practical value in the day of ceaseless financial globalization.Finance is the core of modern market economy, of which the stability and safety are foremost. However, in light of the development history of finance in the world, the development road of financial globalization has always run along with financial crisis. Especially, in recent decades, financial crisis has broken out in larger scale more frequently and caused more severe impact. It broke out not only in developing country with imperfect financial system but also in developed country with mature financial system. For example, global financial crisis triggered by subprime lending crisis in USA in Summer 2007 has released a hit that is unpredictable at present. Therefore, the study on how the financial system of one country and the world plays the role of resources distribution in better way in globalization background and promotes the economic growth has turned out to be an issue that many scholars at home and abroad focus on.For China, our integration into the globalization is unavoidable. The global development brings us both opportunity and serious challenge to our financial stability. Especially with China's access into WTO, the reform and opening in financial field are intensified. Financial industry is confronted with more severe market competition. Financial risk and instability factor become outstanding. The safety and stability of financial system is surrounded by unprecedented challenge. In such background, how to guarantee the efficiency of fiscal and monetary policies as well as the normal function and sound & stable operation of financial system has turned out to be important practical problem for us.On the basis of such theory and practical significance, this article presents an in-depth analysis on financial stability in China in the financial globalization background. Firstly, the article discusses the connotation of financial stability on the basis of existing studies, indicates that financial stability is macroscopic concept and refers to a dynamically balanced status in certain social and economic environment. In such status, various parts of financial system run in balanced structure, and accord with the development of society and economy; financial system can effectively and continuously exert a function of resources distribution and social wealth growth boost; moreover, the financial system can effectively manage the risk and prevent the centralized outbreak of financial risks; and it has the ability of resistance against internal and external shocks and self-recovery from an unbalance caused by shock. At the same time, this article analyzes the impact of financial globalization upon financial stability and indicates the significance of the study on the financial stability in globalization background.Secondly, the article selects financial structure, financial liberalization and financial supervision as three aspects in the analysis on financial stability, and elaborates the impacts of these three aspects upon financial stability as well as their interaction mechanism. The financial structure not only directly influences financial stability through its internal components but also indirectly impacts the financial stability via monetary policy and real economy. Moreover, financial stability reacts on financial structure; financial deepening is important channel for improving financial competitiveness edge and promoting economic growth while financial liberalization is also main reason of financial crisis; and financial supervision is necessary means for one country to prevent financial crisis and guarantee sound and stable development of financial system. Under the impact of globalization development, the coordination and cooperation on financial supervision between different regions and countries are main channel for resisting financial crisis.Finally, the article focuses on China and analyzes the factors influencing financial stability in three aspects i.e. financial structure, financial liberalization and financial supervision. It points out that China is now confronted with the impact of financial globalization. Although financial system in China is stable by and large, there still exist some problems e.g. unbalanced financial structure, low efficiency in financial resources distribution; inadequate financial deepening, slow progress of market-oriented operation of interest rate, non-thorough reform of exchange rate system, non-open capital account; and no perfect financial supervision rules. With regard to the problems, the article tries to bring forward the policy proposals for maintaining financial stability in China, including financial structure optimization, deepened reform of the rules on RMB interest rate and exchange rate, improvement of financial supervision level and promotion of the setup of international cooperation mechanism for financial supervision.