With the deepening of economic monetization, it is a basic need to establish an effective and adaptable trading and payment system. A reliable transaction and payment system should be the infrastructure of the financial system. Without this system, high transaction costs will inevitably be accompanied by economic inefficiency. An effective payment system is a necessary condition for social transactions. The development of exchange system can reduce social transaction costs and promote the development of social specialization, which is a necessary condition for the development of socialized mass production and can greatly improve production efficiency and technological progress. Therefore, modern payment system and modern economic growth go hand in hand.

2. The financing function of the financial system

The financing function of the financial system contains two meanings. Means of mobilizing savings and providing liquidity. Financial markets and bank intermediaries can effectively mobilize the savings resources of the whole society or improve the allocation of financial resources. This enables the effective technology of initial investment to be quickly transformed into productivity. While promoting more effective use of investment opportunities, financial intermediaries can also provide relatively high returns for social depositors. The advantages of financial intermediaries in mobilizing savings mainly include: first, they can spread the risks of individual investment projects; Second, it can provide investors with relatively high returns (relative to physical assets such as durable consumer goods). Mobilizing savings in the financial system can provide aggregation function for dispersed social resources, thus giving play to the scale effect of resources. The liquidity service provided by the financial system effectively solves the problem of the source of funds for long-term investment, makes it possible for long-term project investment and enterprise equity financing, and creates a fund supply channel for technological progress and venture capital.

3. The equity refinement function of the financial system

Divide the inseparable large-scale investment projects into small shares and let small and medium-sized investors participate in the investment of these large-scale projects. The financial system realizes the monitoring of managers and the control of companies through the function of equity refinement. In the modern market economy, profound changes have taken place in the company organization, that is, the equity is highly dispersed and the company management is specialized. The biggest difficulty of this organizational arrangement lies in the existence of information asymmetry, which makes it difficult for investors to effectively supervise the use of capital. The function of the financial system is to provide a new mechanism, that is, to strictly supervise the company through the role of external lenders, thus protecting the interests of internal investors.

4. Financial system resource allocation function

Raising sufficient investment resources is a necessary condition for economic take-off. But the efficiency of investment, that is, the efficiency of resource allocation, is equally important to growth. The allocation of investment has its own difficulties, that is, productivity risk, incomplete information of project return and unknowability of operators' actual ability. These inherent difficulties require the establishment of a financial intermediary. In the modern uncertain society, it is difficult for a single investor to evaluate the company, managers and market conditions. The advantage of the financial system lies in providing intermediary services for investors, providing a mechanism to share risks with investors, and making the investment allocation of social capital more efficient. The investment services provided by intermediary financial institutions can be shown as follows: first, spreading risks; The second is liquidity risk management; The third is to evaluate the project.

5. Financial system risk management function

The risk management function of the financial system requires the financial system to trade and price the uncertainty of medium and long-term capital investment, that is, risk, and form a risk-taking mechanism. Due to information asymmetry and transaction cost, the role of financial system and financial institutions is to trade, disperse and transfer risks. If the mechanism of transaction, transfer and compensation cannot be found for social risks, the operation of social economy will not be carried out smoothly.

6. Incentive function of financial system

In economic operation, the incentive problem exists not only because the goals or interests of economic individuals who interact with each other are inconsistent, but also because the realization of each economic individual's goals or interests is influenced by the behavior of other individuals or the information they have. In other words, not all the factors that affect the interests of an economic individual are under the control of the subject. For example, the separation of ownership and control in modern enterprises has created the incentive problem. There are many ways to solve the incentive problem, and the specific methods are influenced by the economic system and environment. The solution to the incentive problem provided by the financial system is stock or stock option. By allowing managers and employees to hold stocks or stock options, the interests of enterprises will also affect the interests of managers and employees, so that managers and employees can try their best to improve the performance of enterprises, and their behavior will no longer be contrary to the interests of owners, thus solving the principal-agent problem.

7. Information providing function of financial system

The information providing function of the financial system means that in the financial market, not only investors can get information about the prices of various investment products and the factors that affect these prices, but also fundraisers can get information about the costs of different financing methods, and management departments can get information about whether financial transactions are going on normally and whether various rules are observed, so that different participants in the financial system can make their own decisions.

Edit the capabilities that the financial system must have to realize its functions in this paragraph.

1. Stability

Only a stable financial system is competitive, can it cope with all kinds of potential threats, resolve financial risks and ensure financial security, can it maintain monetary stability, and there will be no excessive inflation or deflation, excessive distorted financing arrangements and excessive financial bubbles. Therefore, the financial system should be stable. The price of instability in the financial system is very serious. First of all, the disorder of the pricing system will disrupt the trading order in the real economy and undermine normal production activities; Secondly, social credit will be affected, and financing activities will be difficult to carry out normally, thus affecting investment and economic growth; Thirdly, the unstable financial system makes people have uncertain expectations, which easily leads to destructive collective actions and has a strong impact on normal economic activities. Therefore, maintaining the stability of finance itself is of great significance to the stability of the overall economy. Financial stability requires that the pricing system can operate normally, and the price indexes such as currency, interest rate, exchange rate and stock price remain stable; It is required to have a crisis early warning index system and a risk identification, transfer, control and dispersion mechanism, which can cope with the impact of emergencies, resolve risks and lift crises; Require rules and regulations that restrict microfinance institutions from entering the financial market and carrying out various business activities, and ensure that they can be observed; It requires the establishment of macro-control institutions, regulatory rules and regulatory means for the financial system.

2. Adaptability

The financial system realizes its function in a specific economic environment. The financial system must adapt to its economic environment, which is constantly changing, so the financial system must also change synchronously, that is, it must have adaptability and innovation ability. The adaptability of the financial system, that is, the financial development of a country, should be placed on the system construction and coordinated development that emphasizes the normal function of the financial system, rather than focusing on the development of the external structure of the market and the expansion of its scale without the basic functions of the financial system. Otherwise, ignoring financial functions and talking about financial development may cause serious waste and distortion of financial resources. In addition, it is worth pointing out that the activities of the financial system have externalities: focusing on a certain financial function may sometimes amplify its negative effects. For example, in order to improve the price discovery function of the financial system, market integration and marketization of interest rates and exchange rates are necessary, but these practices will increase market risks. If the risk prevention and decentralization functions of the financial system are not in place, then this unbalanced development will lead to macroeconomic instability, which will eventually inhibit the normal play of the price discovery function of the financial system. A financial system that can ensure the benign interaction between financial development and the real economy is definitely not a simple collection of investment and financing systems and financial instruments with the best scale and quantity, but a dynamic system that can balance various conflicts of interest and optimize the effect, and on this basis, it can effectively play the six basic functions of the financial system, thus promoting the sustained and stable growth of the real economy.

3. Operating ability

The financial system must realize its function through its own business activities. In addition to the initial necessary investment, we cannot rely on the continuous capital investment of the government or any individual. Only in this way can the financial system exist for a long time and develop continuously, that is, the financial system must have the ability to operate. The operating ability of financial institutions refers to the extent to which financial institutions use economic resources to achieve their operating objectives. Due to the diversity of economic subjects, business objectives are diversified, and business performance is a comprehensive reflection of diversified objectives and business capabilities. Financial institutions achieve their business objectives by providing financial services or tools such as debt instruments, the right to use credit assets, stocks and bonds to the society. Financial institutions must rely on their own ability to perform their functions, but not on the continuous input of external resources, so operating ability is a necessary condition for the survival of financial institutions and the basis for their continuous development.

4. Configuration ability

In order to give full play to the functions of providing channels for the transfer of economic resources in time and space and financing and refining equity, the financial system must be able to price financial assets, turn illiquid assets into liquid assets, and optimize the allocation of assets. Therefore, the financial system must have allocation ability, liquidity and pricing ability. The allocation efficiency of financial resources refers to the market's ability to provide financial resources for capital demanders at the lowest transaction cost, in other words, the ability to allocate limited financial resources to enterprises and industries with the best benefits. The role of financial intermediaries in capital allocation mainly comes from the information advantages of financial intermediaries. Under the government-led financing system, banks and enterprises should be closely related in theory, especially in Japan, South Korea and other countries, which is very conducive to the information flow between banks and enterprises. Banks can make full use of this information advantage, select good projects, and effectively supervise the project schedule to achieve high efficiency in fund allocation. To improve the efficiency of capital allocation, we can not only make use of the information advantages of financial intermediaries, but also reduce the amount of information needed for capital allocation through contractual arrangements. Adverse selection and moral hazard caused by information asymmetry are the main factors affecting the efficiency of fund allocation. When the proportion of enterprises' own funds increases or mortgages and guarantees increase, adverse selection and moral hazard can be reduced or even eliminated, thus reducing or even canceling the demand for information when banks provide loans, that is, there is a complementary relationship between information and their own funds, mortgages and guarantees. The financial system efficiently guides the flow of funds from the savings field to the investment field through various channels such as banking, securities and insurance, gives play to the supervision function of the financial system, promotes the virtuous circle of funds in the real economy, and realizes the optimal allocation of resources.

5. Conductive ability

All countries regard the financial system as a way to macro-control the economy and transmit policy intentions, and the financial system must have the transmission ability to achieve this goal. The financial system is an important channel for the government to influence the real economic sector and promote economic growth. The reason why it can naturally undertake the function of conveying policy intentions is that it is inextricably linked with economic departments and has the characteristics of convenient operation and easy measurement and control. The transmission of policy measures through the financial system generally needs to go through the following three levels: the first level is the transmission chain of the influence of monetary policy on the financial system, the second level is the transmission chain of the influence of the financial system on the real economy sector, and the third level is the contribution chain of all sectors of the real economy to economic growth. The ability of financial system to convey policy intention can be measured by timeliness, completeness and accuracy. Government policies and measures will produce good results only if they are disseminated in time, otherwise, such policies and measures may be counterproductive in the changed environment. Honesty means that all the government's policy intentions must be transmitted to economic activities, and some of them cannot be omitted, otherwise the expected policy effect may not be achieved. Accuracy refers to the transmission in the way designed by policy makers, so that these policies can play their roles in the way expected by policy makers.

6. Liquidity

Liquidity means that resources can flow more fully because of the role of the financial system. The full flow of resources has obvious benefits to economic operation, which enables idle resources to be put into use and inefficient resources to flow to more efficient uses. The liquidity of the financial system has two meanings, one is its ability to convert fixed and illiquid assets into liquid assets, and the other is its ability to transfer liquid assets between different investors. How to measure the liquidity of financial system? First, when all the effective capital supply flows to the demand side, all the effective demand is met, there is no idle capital and no unsatisfied effective capital demand, the supply and demand of monetary funds will reach the best equilibrium. Second, the marginal value of resources allocated for various purposes is equal, which makes the allocation of resources in the best state.

7. Pricing power

Market economy follows the principle of equivalent exchange, and transactions in financial markets are no exception. Pricing in financial transactions should not only consider the intrinsic value of financial products, but also consider their risk value. In the financial market, the price of financial products can be formed through public bidding. Through this bidding process, the financial market can quickly balance the supply and demand of financial products and form a unified market price of financial products. Based on this, the financial market can effectively guide the accumulation of incremental financial resources and the adjustment of stock resources. Therefore, the accurate pricing of financial assets by the financial system is the premise of allocating resources and digesting risks.

8. Innovation ability

The financial system exists and plays a role in a specific economic environment. No financial system can exist independently from the economic environment. Due to the deepening of social division of labor and the further strengthening of international economic ties, the application of technical means and knowledge in economic development is increasing, the market transactions are increasing, and the modern economic environment is becoming more and more complicated. Accordingly, risks in modern economy are becoming more and more complicated. Therefore, the financial system, which plays a decisive role in the economy, must have the ability to change with the changes in the economic environment. Only in this way can it exercise its functions normally and meet the requirements of economic development for the financial system. The innovation of financial system and the change of economic environment are interactive. The rigid financial system will only hinder the economic operation, thus restricting the further development of the economy.

9. Information capacity

The function of financial system to transmit information is particularly important. It is precisely because of this function that markets are truly linked. Compared with the independent supervision of an enterprise managed by an agent by a single investor, it is cheaper for investors to unite to form an alliance, which is supervised by representatives. This alliance can be a financial intermediary or a financial market. Financial intermediaries have comparative advantages in supervising enterprises, while financial markets have comparative advantages in obtaining and summarizing information. An important function of financial market, especially the stock market, is to spread information in time and quickly. Because the transaction price of the stock market is rapidly changing and open, and as an effective market, the stock price contains a lot of company information. Coupled with the information disclosure of the stock market, the stock market has become the most complete and fastest market for information dissemination. Nevertheless, the information in the stock market may still be incomplete, so there are arbitrage opportunities. Investors who obtain company information through non-public channels can make profits by buying and selling securities before the information is widely disseminated.

Editing the role of banks and securities markets in completing the functions of the financial system

Among the factors that affect the financial system, transaction cost and information asymmetry play a very important role. Several main functions of the financial system are related to these two factors. Transaction cost refers to the time and money spent in financial transactions, which is the main factor affecting the efficiency of the financial system. For individuals, the transaction cost of issuing loans is very high. In order to protect their own funds, before issuing loans, it is necessary to investigate the project, examine the borrower's credit level, and hire specialized legal personnel to design a complete loan contract. The existence of high transaction costs has become an obstacle to the flow of funds between borrowers and lenders. Financial intermediaries such as banks have great advantages in solving this problem. They have economies of scale, so they can save transaction costs. Financial intermediaries collect funds from individuals and enterprises and then lend them out. Due to the formation of economies of scale, financial intermediaries can reduce transaction costs. Information asymmetry will lead to adverse selection before trading and moral hazard after trading. If we want to minimize adverse selection in the loan market, we need lenders to identify good projects from the risks of non-performing loans. The existence of moral hazard reduces the possibility of repayment and the expected income of lenders, thus reducing their desire to provide loans. This problem also exists between shareholders and managers. Shareholders expect the company to maximize profits, thus increasing the owner's rights and interests. In fact, managers' goals often deviate from shareholders' goals. Due to the large and scattered number of shareholders in the company, it is impossible to effectively monitor managers, who have private information, and shareholders cannot avoid managers hiding information and implementing behaviors that are beneficial to themselves and unfavorable to shareholders. Financial intermediaries also show their own advantages in solving moral hazard and adverse selection caused by information asymmetry. Because it is an expert in making company information, it can distinguish the level of credit risk to a certain extent. Banks and other financial intermediaries obtain funds from depositors and then lend them to good companies, which ensures the bank's income. After the loan is issued, the bank will supervise the project on behalf of the depositors. Once a bank signs a long-term loan contract with an enterprise, the cost of supervising the enterprise is lower than that of directly supervising the enterprise. The role of financial intermediaries is "agent supervision". The principal-agent problem between debtors and creditors can be solved to some extent. Of course, banks can't completely solve the problems caused by information asymmetry. Compared with depositors, banks have the advantage of mastering information, while borrowers know the most about themselves and the nature of the project. Therefore, banks often face the problems of moral hazard and adverse selection, and the bad assets of banks illustrate this point. The relevant institutional arrangements and mechanisms of the securities market, especially the stock market, will reduce the agency cost and partially overcome the moral hazard and adverse selection in capital allocation. Moreover, the development of the stock market is also conducive to the control of the company. Owners will combine the performance of the company in the stock market with the remuneration of managers, thus effectively linking the interests of managers and owners. At the same time, liquidity will reduce the transaction cost and uncertainty of financial assets. Some high-return projects need long-term capital investment, but depositors can't bet their savings on long-term investment. Therefore, if the financial system cannot increase the liquidity of long-term investment, the investment in long-term projects will be insufficient. Thus, the main difference between using bank financing and using capital market financing focuses on solving the moral hazard and adverse selection problems caused by transaction costs and information asymmetry. Banks have more advantages than the securities market in reducing transaction costs; Under the condition of asymmetric information, the ability of banks to solve the principal-agent problem is also stronger than that of the securities market. This can also explain why people once thought that the bank-led financial system was more conducive to economic development than the market-led financial system. However, in the past 20 years, market-oriented countries, especially the United States, have experienced sustained economic prosperity, while the competitiveness of bank-oriented countries has been significantly weakened. Not only that, bank-led countries are still vigorously developing market mechanisms and have a tendency to integrate into the market-oriented system. Among them, the role of technological progress can not be ignored.

Edit the influence of scientific and technological progress on the financial system in this paragraph.

(1) Changes brought about by technological progress. Since the 1970s, the three most remarkable changes in the international financial market are asset securitization, internationalization of financial markets and online transactions. The progress of computer technology is an important material basis for these changes. 1. Asset securitization. Securitization is to transform illiquid financial assets into tradable capital market tools. From computer records, financial institutions find that they can bundle various forms of debt portfolios, collect interest and principal, and then sell them to third parties. Securitization began in 1970s, and now two-thirds of the fixed collateral has been securitized. For example, in the mid-1980s, 1985 only issued $9 billion, which later increased to 1986. Computer technology also enables financial institutions to customize securities according to the special needs of the market, such as collective mortgage debt. Computerization can divide collective mortgage debt into several levels. Each level obtains different benefits according to different risk levels. 2. Computer technology is the key to online trading. Online trading can buy and sell a large number of stocks and other valuable securities through the network. And the transaction cost is greatly saved. At the same time, it also breaks the geographical restrictions of participants, allowing traders to participate in the transaction immediately no matter where they are. Although the problem of network security still exists, online trading in the securities market, like other types of e-commerce, is regarded as a development direction with broad prospects. 3. Computers and advanced electronic communication technologies are also important driving forces for the internationalization of financial markets. Advances in technology enable traders to transmit stock prices and instant information around the world. Traders can not be restricted by market business hours, and the cost of international exchange is low, making it easier for them to invest abroad. The electronization of the securities market began at 197 1, and Nasdaq, the automatic quotation system of the American Association of Securities Dealers, became the first electronic securities market in the world. In Europe, the process of electronic securities market began with 1986. Britain has established the latest "Stock Exchange Automatic Quotation System", which is carried out by computers connected with new york and Tokyo through satellite lines, realizing 24-hour trading of global securities. (B) the impact of technological progress on the financial system. The above changes correspondingly changed the financial system, including: 1. The debt market is bigger, and more and more debt instruments are being traded. The progress of information technology has reduced the information asymmetry in the financial market and alleviated the problems of adverse selection and moral hazard. In the past, assets in the balance sheets of financial institutions can now be traded. Financial institutions turn opaque assets into securities with sufficient information through classified pricing and repackaging of risks, and the transaction cost is also reduced. The decline in transaction costs has increased the supply of such debt and enhanced its liquidity. Therefore, the debt market has developed. This kind of debt not only appears in the form of bank loans, but also is usually traded in the securities market as a new financial product, such as CMO bonds. 2. With the development of derivative products market, the market risk cost of enterprise transactions is reduced. The derivatives market appeared in 1970s, and the OTC derivatives market developed rapidly in 1980s. Their appearance is a response to the demand of both supply and demand. In 1970s, the macroeconomic turmoil and the related exchange rate and interest rate were also unstable, which increased the demand for enterprises to better manage system risks. On the supply side, the development of financial theory enables financial institutions to operate in these markets at lower cost, especially financial engineering provides a theoretical basis for capital pricing and risk management. 3. The development of payment system to electronic system reduces the need for families to invest their wealth in bank deposits. In the past, a large number of retail payments were made by cheque. In recent years, the application of electronic payment technology has been rapidly popularized. The application scope of automatic teller machine (ATM) is expanding. This technology appeared in the 1970s. Between 1988 and 1998, the number of ATMs doubled and the transaction volume tripled. At the same time, the application of credit cards and debit cards also developed rapidly in the 1990s. The impact of technological progress on the financial system is achieved by solving the problems of transaction cost and information asymmetry. Its impact on transaction costs is that the emergence of computers and cheap data transmission have led to a sharp drop in transaction costs. By increasing the number of transactions and allowing financial institutions to provide new products and services at low cost, the financial system is more efficient. Computer and communication technology can be collectively referred to as information technology. It has a far-reaching impact on the information symmetry of financial markets. Investors can more easily identify the risks of non-performing loans or supervise enterprises, thus reducing the problems of adverse selection and moral hazard. As a result, the obstacles to the issuance of tradable securities are reduced, thus encouraging the issuance. The inevitable result of this is that people's dependence on banks is reduced and the importance of banks in the financial system is weakened; At the same time, compared with banks, the disadvantages of securities market in solving the above two problems have been largely compensated, and its advantages in liquidity have been brought into play, and its importance has become increasingly prominent. As a result, the bank-led financial system shows a trend of integration into the market-led financial system.

In this section, edit the framework of financial institutions in China.

According to the status and role of China's financial institutions, the main system is as follows: central bank. The People's Bank of China is the central bank of China, which was established in June 1 948+February1. Under the leadership of the State Council, formulate and implement monetary policies, prevent and resolve financial risks, maintain financial stability, provide financial services, strengthen foreign exchange management, and support local economic development. The main difference between China People's Bank and China Bank is that China People's Bank is a government bank, a bank of banks and an issuing bank, and does not handle specific deposit and loan business; China Bank bears the same responsibilities as industrial and commercial bank, agricultural bank and China Construction Bank. Financial regulatory agencies. China's financial regulatory agencies mainly include: China Banking Regulatory Commission, hereinafter referred to as CBRC, which was established in April 2003, mainly responsible for the banking regulatory functions handed over by the People's Bank of China, and unified supervision and management of banking financial institutions, trust and investment companies and other financial institutions; China Securities Regulatory Commission, referred to as China Securities Regulatory Commission for short, was established in 1992 and 10 to supervise and manage the securities and futures industry according to law; China Insurance Regulatory Commission (hereinafter referred to as CIRC) was established on June 20 141998165438+10, and is responsible for the supervision and management of the national commercial insurance market. According to China's current laws and relevant regulations, the People's Bank of China has retained some financial supervision functions. State administration of foreign exchange. Established in1March, 979 13, and then entrusted by the People's Bank of China; 1In April 1993, according to the institutional reform plan of the State Council approved by the first session of the Eighth National People's Congress and the Notice of the State Council on Establishing a State Bureau under the management of ministries and related issues, the State Administration of Foreign Exchange is the State Bureau under the management of the People's Bank of China, and it is an administrative organ that manages foreign exchange according to law. The board of supervisors of key state-owned financial institutions. The Board of Supervisors is sent by the State Council, responsible for the State Council, and supervises the asset quality of key state-owned financial institutions and the preservation and appreciation of state-owned assets on behalf of the state. Policy financial institutions. Policy financial institutions are institutions initiated and funded by the government to carry out financing and credit activities in order to implement and cooperate with the government's specific economic policies and intentions. The policy financial institutions in China include three policy banks: China Development Bank, China Agricultural Development Bank, Export-Import Bank and China Agricultural Development Bank. Policy banks are not for profit, and their business development is bound by the national economic policies and guided by the China People's Bank. Commercial financial institutions. Commercial financial institutions in China include banking financial institutions, securities institutions and insurance institutions. Banking financial institutions include commercial banks, credit cooperative institutions and non-bank financial institutions. Commercial banks refer to for-profit institutions that mainly take deposits, issue loans and engage in intermediary business, mainly including state-owned commercial banks (China Industrial and Commercial Bank, China Agricultural Bank, China Bank and China Construction Bank), joint-stock commercial banks (Bank of Communications, CITIC Industrial Bank, China Everbright Bank, Huaxia Bank, China Minsheng Bank, Guangdong Development Bank, Shenzhen Development Bank, China Merchants Bank, Industrial Bank, Shanghai Pudong Development Bank and hengfeng bank). ), etc. Credit cooperative institutions include urban credit cooperatives and rural credit cooperatives. Non-bank financial institutions mainly include financial asset management companies, trust and investment companies, finance companies and leasing companies. A securities institution refers to an institution that provides intermediary services for securities market participants (such as financiers and investors), including securities companies, stock exchanges, securities registration and settlement companies, securities investment consulting companies and fund management companies. The securities mentioned here mainly refer to stocks, bonds, investment funds, depositary receipts and other securities issued and circulated with the approval of relevant government departments. Direct financing through securities as a carrier can realize the organic combination of investment and financing, and can also effectively save financing costs. Insurance institutions refer to institutions specializing in insurance business, including state-owned insurance companies, joint-stock insurance companies, foreign-funded insurance branches and Sino-foreign joint-venture insurance companies engaged in insurance business in China.