The Risk Management Of Offshore Financial Market

Since the policy of Reform and Opening up has been carried out in our country, the internationalization degree of our country's economy and finance raises continuously. But because of being restricted by the local system environment and other factors, the realization of real economy internationalization and financial internationalization still needs a process. Developing the offshore financial market is our country's strategic step to carry out our financial internationalization. Meanwhile, it will bring the profound influence in the field of economy and finance industry of our country to develop the offshore financial market. Therefore, at the beginning of developing the market, we should think over the matter of market safety and risk management systematically and completely.Presently, the domestic research on the risk management of offshore financial market is just at the duration of beginning. And most of them focus on the introduction of the conditions about the risk management of offshore financial market in western developed countries. Therefore, the research on domestic conditions is not very ample. These kinds of research are lack of integration, completeness and utility. Basing on the existing related research, the article summarizes the present conditions of international offshore financial market and our country's offshore financial market firstly; secondly analyses systemically the risks caused by the developing of our country's offshore financial market and the source of this risks; thirdly evaluates the efficiency of our country's financial supervision, and analyses and necessity of the risk management of offshore financial market, meanwhile aiming at the localization of our country's risk management of offshore financial market, the article advances the creative and practical solutions from macroscopic and microcosmic two angles of view; finally the article analyses the emphasis of the future management.The analysis of the article indicates that the adoption of improper policies and lack of effective regulation during the time of developing our offshore financial market may give rise to a series of risks. It may cause incontrollable foreign debts, pressure on domestic money supply, systematic risk of domestic banking system, the fluctuation of the price of local-currency assets and of exchange rate, and imbalance in the current accounts. Meanwhile it may provides the path of misappropriatethe state-owned property and public property, makes a convenience for company bilk, and imputes financial risks by the corrupt officers and the evil businessmen. It results in the further expanding of capital flight. The internal reason of Asian Financial Crisis is the improper management of offshore financial market at a certain extent.The analysis of the article finds out that the present regulation condition of our country's offshore financial market is high stability, moderate efficiency and low impartiality. There are some shortages in our country's offshore financial market regulation. Therefore, the regulation authority should consider the better instrument to perfecting the risk management according to the above condition. It includes: strengthening market admittance and withdrawal, the business realm limit, strengthening bank check and founding the system of information reveal, LLR (Lender of Last Resort) system and saving insurance system.The article analyses the shortage in microcosmic control of our country's offshore financial market and advances the self-control principle in risk management according to writer's own offshore financial work experiences. And then the article discusses the solution: strengthening interest rate control, balance-sheet constraints and intensifying the separate management between offshore and onshore operation.The article, from macroscopic and microcosmic two angles of view, explores the causes for the formation of offshore finance, analyses its trend of development and the various factors that impacted its development, and finds out the causes that produced the risk. The study seeks for the ways to control the risks in the highly internationalized offshore market and business in the context of quite high financial globalization and liberalization and introduce those experience and lessons of risk control into the onshore financial market and business for the purpose of overall and effective control of financial risks. After all, regulation is just means. Its aim is to accelerate the progress of our offshore financial market more healthily, more stably, and more efficiently, and to develop more rapidly in our socialism construction.