Effectiveness Of Supervision Of China Cross-border Capital Flows

In the current times of economic and financial globalization,cross-border capital flow has become one of the focuses of attention ofthe international economic and financial circles. International experienceshows that, the normal flow of cross-border capital is an important forceto promote the economic development of a country, but affected by thevarious internal and external factors, abnormal cross-border capital flow,especially largely flowing in and out, will be a great bad impact on acountry’s economy. Under certain conditions, there may trigger currency、banking and debt crisis. Financial crisis in Latin America in twentiethcentury70-80years, the Asian financial crisis, Russia and Brazil currencycrisis in twentieth century90years, as well as global financial crisis in2008, is closely related to large-scale cross-border capital flow.With the integration into the global economy, China’s cross-bordercapital flow has grown rapidly, which has played a significant role inChina’s economic growth, and brought challenges to the safety of China’seconomy and finance at the same time. How to adapt to establishcross-border capital flow regulation framework, which can promote fulluse of cross-border capital flow to China’s economic and financialdevelopment, and can effectively prevent the risks of large-scalecross-border capital flow, has become a great realistic subject for a longperiod of the future.The paper entitles effective supervision of cross-border capital flows,introduces the development process and speciality of China’s cross-bordercapital flow regulation, make the overall evaluation of effectiveness ofChina’s cross-border capital flow regulation from two aspects of macroand micro, carries on the analysis to the impact of China’s cross-bordercapital flow regulation effectiveness factors from two angles at home andabroad. From a domestic perspective, not reasonable regulatory targetpositioning, relatively backward supervision system, no macro-prudentialsupervision framework, special economy development stage, RMBcross-border business development, are the main affecting factors. From ainternational perspective, the current unreasonable international monetary system increasing the vulnerability of cross-border capital flow in ourcountry, is the main factor affecting the effectiveness of supervision.The paper summarizes the practical experiences of supervision ofcross-border capital flows from some representative developed anddeveloping countries and IMF. On this basis, combined with theactual situation and the future development of our country, the paper putsforward to perfect China’s cross-border capital flow regulation framework.On the regulation ideas, it is the guidance of risk management, clarifiesthe boundary of government and the market, makes the market playing adecisive role in allocating resources and the government playing a betterrole, transfers from exante regulation to afterwards regulation, fromadministrative regulation to macro-prudential supervision, adapts to theeconomic and financial openness level, takes into account both short-termand immediate and long-term interests, insists the balanced management,prevent the the financial crisis arising from cross-border capital flow.Under this guideline, the corresponding cross-border capital flowsregulatory framework includes three levels: The first level, themarket plays a decisive role in allocating resources, namely the exchangerate、interest rate and other price measures playing a decisive role in theregulation of cross-border capital flows. The second level, governmentplays a better role, that is to transform the ideas and ways of supervision,to take into account both facilitation and anti-risk, to set up regulationframewok suitable to business pattern of business takers, including theimprovement of micro-prudential supervision framework, establishing asound framework for macro prudential regulation, reserving capitalcontrol rights, introducing expectation management and establishing thecrisis early warning system. The third level, it is to establish the domesticand international cooperation correlation, which is to improve thesupervision cooperation of cross-border capital flows at home and abroad,to realize information sharing and form a resultant force.