Discussion On Strengthening The Function Of People’s Bank To Maintain The Financial Stability

The Central Bank is the special financial institution given by the State to developand implement monetary policy, macro-regulation and supervision of the nationaleconomy. To maintain the financial stability has always been one of the mostimportant functions of the central bank. The State Council defined that the People’sBank of China (PBoC) function solely as the central bank In1984. The promulgationof People’s Bank of China Law in1995established the PBoC’s position as the centralbank in the form of national legislation for the first time. Than People’s Bank of ChinaLaw revised in2003added the function of the PBoC to maintain the financial stability.It highlighted the role of PBoC in maintaining financial stability after theestablishment of the CBRC and the implementation of specialized supervision.In recent years, the government of China made many needed reforms in thefinancial system and market. The PBoC achieved good results in Promoting thecoordinated development of banking, securities and insurance industries. HoweverChina is in a period of social transition. Foreign banks will gradually influx offinancial markets. Domestic financial business innovation has already begun. Alongwith the financial crisis, how to display the function of maintaining financial stabilityto adapt development needs and to Maintain stable and healthy development of thefinancial industry? This became an important subject worthy of study.This article is starting from the basic definition of financial stability. The author summarized the basic definition of financial stability and its connotation. Financialstability has the property of public goods. To maintain the financial stability hasextremely important practical significance for the economy. It’s the guarantee of thesustainable development of the national economy, the goal of financial innovation anddevelopment, an important component to set up harmonious society and the inevitablerequirement of carrying out scientific development view.After analyzing our country’s financial stable condition on the basis of definingthe concept, this part summarized the main factor affecting financial stability:financial market system, macroeconomic environment and the impact of financialglobalization. So we need the central bank to maintain the financial stability. As thecentral bank of our country, the PBoC made the institutional adjustments, Establishedthe basic framework for maintaining financial stability. It plays a key role inmaintaining our financial stability and preventing finance risks.This paper takes one center sub-branch of PBoC in Jiangsu province for example.Through the analysis of the region’s economic and financial environment, the authorexplicated that the function of this sub-branch of PBoC is to implementing monetarypolicy, to provide financial services and to maintain financial stability. By analyzingthe status quo of its duties, the author summed up the role played by the sub-branch ofPBoC of maintaining financial stability for the city’s economic development.Combined with sub-branch’s own unique advantages and disadvantages, theauthor analyzed the key problem that the PBoC being faced with during maintainingfinancial stable process, and concludes that the PBoC should further strengthensub-branch’s organization system construction and function implementation. Theserecommendations include: improve laws and regulations, perfect the coordinationmechanisms of the financial stability, guide monetary policies to be effectiveimplementation and strengthen the internal construction of the PBoC.