Macroprudential Policy Tool’s Selection And Application In China

After 2008 financial crisis, the monetary authorities and relevant government departments of different countries attach great importance to system risks in the macro views. In order to avoid crisis, governments construct macroprudential institutions to research how to choose and apply macroprudential tools and research how to choose and implement policy. We can learn a lot in these.In order to have good anticipation the system risk in our economy, our country strengthens the management of financial system risks in the same time. In the background of these, higher requirements our government to cope with system crisis have been put forward. In 2010, the 17th Session of Fifth Plenary Session clearly proposed to "construct a counter cyclical macroeconomic prudent management system framework", which includes difference reserve adjustment, dynamic counter-cyclical adjustment and so on.But the pattern of our economy and finance pattern are changing, which is harder to constructs the frame of macroprudential. I think there are three problems still exist:1) In the issue of macroprudential tool’s selection, we are lack of the policy tools in the base of macroprudential; 2) In the issue of macroprudential tool’s implementation, we are lack of supervision department to implement policy effectively; 3) In the issue of facing different system risk, different system risk with different solutions, supervision institutions are lack of the tools to choose solutions.As for the first question, this paper analysis the source of system risks and constructs a tool bag to implement policy. Then I separate system risks into the risk in the time dimensions and the risk in the space dimensions. In the base of that, I classify the policy tools implemented by different supervision institution into the policy tools to code with time dimension, the policy tools to code with space dimension and the other policy tools. Then I establish the system of choosing macroprudential policy tools through rearranging the relationship of policy tools and the targets of macroprudential. The system of choosing macroprudential policy tools is a policy tools kit to help supervision to improve the tools of macroprudential in our country constantly.As for the question of our country lacking of the supervision institution to implement macroprudential effectively, this paper analyze the economic feature of our country, analogy the supervision institution we set now and use for reference of foreign countries. On the basis of them, I think the institutions of One Bank and Three Commissions can’t coordinate the policy implemented by different institutions. So, I think we should set a commission of policy coordination committee on the basis of One Bank and Three Commissions to be responsible for communicating with different institutions in order to avoid policy conflict because of information asymmetry.As for the third question, in the facing of different potential system risks with different policy to deal with, which may be conflict with each other, this paper designs macroprudential index to choose them. In the process of constructing macroprudential index, I select 15 data to constructs the index by principal component analysis. In the basis of analyzing marcoprudential index, I conclude that the economic operation is improving since 2009 because the policy for space dimension risks, time dimension risks and the efficiency of bank make the effect. But after 2011, the trends tend to be gentle, because the space risks of bank industry is increasing. So for supervision institutions, they should apply the policy tools to code with space risk to avoid the potential space risks.