The Financial Risks Under The Open Economy

With the development of economy globalization and finance liberalization, developing countries now are under the situation of a more open economy. To adapt to such a change, developing countries has released its limitation on finance, opened its financial market to the foreigners, to gain the benefit from its opening process. However, these countries will inevitably be confronted with the financial risks coming with the opening, which mainly reflect in capital flowing and the exchange梤ate system. It is the same with China, as one and the biggest one of the developing countries. So it's necessary to focus on financial risks in developing countries especially in China. The thesis contains three chapters, which lay emphasis on the formation of the financial risks in theory and the current situation in our country. Chapter One mainly discusses the cause of formation of the financial risks and the transmit mechanism in developing countries, to sum up some common laws in these countries, which will help China in its opening course. Chapter Two turns to our country, to deal with the risks in financial opening. A forecast is also made after a further release on capital control. Some suggestions have been made in Chapter Three, which mainly include three measures. One is to set up a financial safety net, one is to strengthen monitor and management, and another is to build up an alert system.