The Lessons And The Inspirations Of The Global Financial Crisis

The United States subprime mortgage crisis broke out in 2007 brought severe trauma, and later it triggered a global financial crisis which brought the sharp shock to the global financial markets. Recalling the reasons of the outbreak of the financial crisis, discussing how countries coped with the financial crisis, reflecting on the experiences, lessons and inspirations from the financial crisis have an important practical significance to how to prevent and respond to financial crises in the future.This total is divided into four parts. The first part is introduction. First it introduces the writing background and significance of this paper, and then summarizes the literature arguments, sums up the writing ideas and the paper structure. Final, it discusses the innovation and the shortcomings.The second part discusses the causes of the new financial crisis and national countermeasures. First it introduces the definition of the financial crisis, and then introduces the causes of the financial crisis. Shrinking real estate market is the fuse triggered the sub-prime crisis; the excessive use of financial derivatives is the catalyst. Blind believing "market anything" and the self-regulating market can solve the problems in economic operations, opposing government intervention and neo-liberal macro-control policy has led to the financial crisis. In addition, there are loopholes in the U.S. financial regulatory system. It ignores the financial risks out of banks and the surface good performance of asset securitization also enables the regulatory authorities ignore its regulation.Finally, the chapter uses the data to introduce the measures which countries deal with the financial crisis. These policies include funding to rescue the market, tax relief, purchase guarantees. It also adopted a loose monetary policy, for example, lower interest rates, buying back bonds and providing loans.The third part and the fourth part is the focus of this paper. Part III discusses the response to the financial crisis in experiences and lessons. The World Bank Senior Vice President said in an interview the whole world should learn from the financial crisis, that is "Not to resolve a problem, but to create a bigger problem." and "In the financial innovation, we must also concerned about the risks of financial innovation."We must improve the financial regulatory system, attach importance to financial risks. Derivatives in the financial innovation process, the U.S. regulatory bodies have not imposing any regulation on the risk of accumulating eventually led to the financial crisis. The outbreak of the U.S. financial crisis reminds that countries should be cautious when introduce financial derivatives instruments, because the risk inherent in derivatives is leveraged by multiples of the individual market may become systemic risk, the risk will be partially expanded to global risk. The banking industry should also improve risk awareness, prudent management, and emphasis on the borrower's repayment ability.Finally, countries should strengthen cooperation, because as the development of financial globalization, economic ties between countries are getting closer and ever closer interdependence. When the financial crisis occurs, any country can't solve on its own strength alone, their macroeconomic management is no longer able to ensure their economic stability. In the context of the financial crisis, we must firmly oppose trade protectionism, in order to prevent the financial crisis deepened.The fourth part is the inspiration of responding the financial crisis to countries. First of all, as a stabilizer, government intervention is a national response to the financial crisis, one of the most direct and most effective options. When there is volatility in the financial markets, the country's government should respond quickly, assess the situation and take timely measures to deal with. Financial crisis, government intervention, the more timely, the effectiveness of the higher, the market recovery time shorter, and the financial losses can be reduced as soon as possible, lose control in a smaller range. Macroeconomic policy adjustments should not only timely but also appropriate, in the process of intervention and the market should be to coordinate the relationship between the two in order to effectively combine, and the government's policy of intervention in the economy should not be prematurely withdraw in order to prevent the emergence of re-recession.Banking institutions need to improve risk prevention capabilities. Banking institutions should strengthen the routine surveillance of employees to establish a high degree of risk prevention awareness, and improve the bank's internal management system, to the principle of prudent operation, the timely detection of risks, avoid risks. Banking sector should also concern about the market risks. In financial markets, interest rate movements are difficult to predict, because so many factors affect the interest rate changes. Banking now need to manage interest rate risk urgently and effectively, to manage the structure of deposits, to use a number of new financial instruments to find ways to circumvent interest rate risk, and resolve interest rate risk.Financial innovation can not be blindly. Financial innovation is a double-edged sword. It can avoid, transfer and spread financial risk, but at the same time, it also brings great challenges to financial stability and financial security. The banking sector should be prudential and should not carry out the innovation business which not match their own development strategies and management capacities under the temptation of profits in the market and the pressure of market competition; managers should follow the prudential management principles, formulate a reasonable risk of management system, comprehensive, and accurate measure of financial innovation, risk, make the right reasonable risk trend analysis.