| In the year of2008, the global financial crisis brought tremendous attack to the world economy. Its serious damage extended to such an extensive degree and its influence upon financial structure was so profound that it has been unprecedented since the Second World War. In terms of financial supervision, each country’s inability to prevent financial crisis and protect financial stability has led the international financial community to reflect deeply upon current financial supervision system. And they reached a general consent that lagging of financial supervision as well as defects of current supervision system were one of the main reasons that caused this crisis.G20London Summit highlighted that the major lapse of financial industry and financial supervision strategy were the fundamental reason leading to this international financial crisis. Before this crisis, current financial supervision, especially prudential supervision, excessively stressed prudential operation of single financial institutions. They held that if all single financial institutions within the system were stable, then there would not be running, not to say crisis, and the whole financial system would be stable. However, as the fact shows, financial imbalance and accumulation of financial systematic risks caused by constant development and change of financial industry can also cause explosion of financial crisis. In particular, under the background of increasingly severe competition, and changing operation model of institutions, deeper intervention of banks into capital market caused by financial mixed management, as well as systematic risks caused by factors such as close interaction that has been existing between financial systems and the real economy are becoming the sources of financial crisis.It is based on such knowledge that the international financial community begins to focus on macro prudential supervision after the crisis. Macro prudential supervision becomes the focal issue of international organizations, also being the emphasis of financial reformation in European countries and in the U.S. after the crisis and also being the core of supervision system reformation.In July2009, Basel Bank Supervision Committee also issued new ideas for supervision reformation, aiming to strengthen macro prudential supervision and to set up conversion-period capital supervision plans. Afterwards, Basel Committee cooperated with G20to actively promote reformation of global financial supervision. And they finally reached Basel Agreement III which was a new global supervision framework. Countries or regional organizations such as the U.S., the U.K. and European Union also put in the core place prevention of systematic risks and macro prudential supervision during the financial supervision system reformation and attach great importance to it.Although this international financial crisis has not directly caused explosion of widespread crisis to banking in our country, it has formed relatively heavy shock to our economical and financial system. After expansion of international financial crisis, our government has successively employed active fiscal and monetary policies to cope with attach of international financial crisis upon our economy and finance. These countermeasures have played an active role in preventing enormous financial recession in our country. But at the same time, it has also brought some problems to promising operation and long-term development of our economy, such as inflation, etc. In terms of our financial system, there is no direct crisis, but it does not mean that our financial system is stable, or that our financial supervision has no problem. Just the same as other countries, our original financial supervision also only stresses micro prudential supervision and overlooks macro prudential supervision. After the international financial crisis and under the overall background of worldwide financial supervision reformation, China also successively takes some measures, starting to value macro prudential supervision. Both People’s Bank of China and China Banking Regulatory Commission have proposed to strengthen macro prudential supervision which has already been implemented in some fields.Under this background, it is of great significance to study issue of our macro prudential supervision. The paper uses methods of theoretical analysis and empirical research to carry out a profound study on related issues of our macro prudential supervision. The paper firstly illustrates relative theories of financial supervision, and then introduces trade cycle theory of Austrian School to explore into the root of systematic risks. On this basis, it applies VAR model, and combines impulse response function as well as variance partitioning to carry out an empirical study on the connection between credit expansion and economic fluctuation in China. Besides, it also employs visual data to analyze influences of our credit expansion and economic fluctuation upon financial stability.In addition, the paper combines theoretical analysis and empirical research, refers to experiences of European countries, America and other regions in macro prudential supervision, and then explores into how to construct framework of macro prudential supervision in China. Main study findings of the paper are shown in the following:Firstly, banks unilaterally divert clients’current deposit which leads to credit expansion and twists production pattern, which is the root for the formation and accumulation of systematic risks. Current deposit contract between clients and banks are fundamentally monetary depository contract instead of monetary loan contract. However, current depositor still possesses constant immediate availability of this sum of capital; while on the other hand, banks unilaterally break the contract and lend this sum of capital to the third party which means that the third party and the current depositor possess usufruct of the same sum of capital at the same time, which is the source of credit expansion. Investment caused by credit expansion is not supported by real deposits. Thus, it has factitiously prolonged and twisted production pattern. Then systematic risks are formed, and further accumulated and enlarged under the influence of such factors as credit expansion multiplier and periodicity.Secondly, empirical research findings show that:A. in China, change of credit scale has obvious influences upon output level; but change of credit scale is characterized by neogenesis feature with respect to the output, which proves from another perspective the influence of our government’s intervention upon credit scale. B. change of credit scale has obvious influences upon output of heavy industries, which proves that credit expansion has affected expansion of our production pattern. In recent years, production capacity surplus that has occurred in China has further verified this conclusion. C. increase of credit scale has obvious influence upon our consumer price level, which shows that production pattern expansion in China is not necessarily caused by increase of real deposits and that credit expansion has twisted our production pattern. D. in China, production pattern twisting caused by credit expansion is an important root for financial instability.Thirdly, after the international financial crisis, macro prudential supervision in developed countries have referential significance for China to construct our own macro prudential framework:developed countries generally highlight attention to systematic risks, value macro prudential supervision; financial supervision system is more unified and concentrated; the role of central bank is intensified in the process of financial supervision; it strengthens protection for financial consumers.Fourth, China’s macro-prudential regulatory framework, should learn from the international financial crisis on the world’s financial system stable shocks learned In conclusion, the developed countries or regions to deal with the crisis on the basis of experience in the financial regulatory system reform from the short-term and long-term two stages consider the progressive realization. The short-term, macro-prudential regulatory regime should be initially established four pro-cyclical regulation, the shadow banking supervision, deposit insurance system reform. The long run, the Government and the relevant regulatory authorities around the prevention of systemic risk, and gradually establish a unified macro-prudential regulatory regime, established the central position of the central banks in macro-prudential supervision, and further strengthen the good consumer protection in order to promote macro-prudential supervision.Compared with current documents, the paper might have following innovations:Firstly, it introduces trade cycle theory of Austrian School, and carries out a relatively profound analysis for the root of systematic risks.Secondly, it employs VAR model, and carries out an empirical analysis upon credit expansion and economic fluctuation in our country, especially the prolonging effect of credit expansion upon production pattern.Thirdly, it proposes to construct our own macro prudential supervision framework. Apart from some advices from the short-term perspective, it also combines related theories and empirical conclusions, refers to experience abroad, and comes up with some ideas about constructing macro prudential supervision framework in China from middle-term and long-term perspectives.Limitations of the paper also exist:Firstly, when analyzing systematic risks, to some extent, ignored under the open economy, international lending and international capital flows, credit expansion effect and the effect of systemic risk.Secondly, when the paper discusses construction of macro prudential supervision framework in China, it fails to consider in-depth interaction between macro prudential supervision and monetary, fiscal policies. |
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