Modern Commercial Bank Funds "three" Balanced Financial Engineering Approach

Due to the particularity of the resources and applications of funds, Modern commercial banks have to consider the equilibrium among safety, liquidity and profitability as the basic ami in daily operations. There are continuously changes in the environment of commercial banking. Traditional financial instruments and management methods are not very suitable to deal with the new problems in the fields of commercial banking. As a result, financial engineering, which introduces engineering methods into the financial fields, develops in the past decades. Financial engineering involves the design, the development and the implementation of innovative financial instruments, and processes, and the formulation of creative solution to problems in finance.Just like any other engineering, financial engineering is based on some important modem financial theories, which mainly include the theory of value evaluation, asset pricing, portfolio management, risk management and so on. On the other hand, multiplex products of financial engineering come from some basic financial instruments. The design of financial engineering products, in fact, is to create new tools and process the present instruments. Changing, compounding and synthesizing are often the main ways to be used.By applying the theories and the instruments, financial engineering will design particular strategies and ways for the optimum solutions. In the fields of commercial banks, financial engineering's operation are to purchase the aims in controlling risk, finding arbitrage opportunity and solving the liquidity problem. There are a serials of methods for the purpose of safety, profitability and liquidity ,such as new methods in asset-liability management hedging technology credit derivatives, arbitrage strategy, asset securitilization and so on.There are some barriers in the broad application of financial engineering methods in the banking of our country at present, in the long term, however, it will benefit china's commercial banks in many respects, which involves the diversification of financial instruments, the promotion of risk management level, the development of innovation and creation, and the internationalization of banking businesses.