The promotion of financial supervision to international financial innovation can be explained from two aspects. On the one hand, the financial authorities pay more and more attention to the business supervision of financial institutions. In order to escape control and pursue profits, financial institutions always try to change financial instruments and management methods to carry out profit-making activities, so financial innovation came into being. On the other hand, the social pressure from financial institutions around the world to deregulate the financial market and the innovative activities of banks to evade management laws and regulations have also forced the management authorities to change management laws and regulations and continuously deregulate the financial sector, thus further promoting financial innovation.

1. Financial control-unfavorable factors of international financial innovation before 1970s.

As a macro-manager, for the sake of social and economic stability, the government must regulate and restrain various economic behaviors through laws and various rules and regulations. Financial enterprises are no exception. After the financial crisis in 1930s, governments all over the world generally strengthened financial control, and the government imposed various restrictions on the types and scope of business of financial institutions, which limited the business space of financial enterprises and hindered their profit-making activities. Only through the innovation of financial instruments and management methods can financial institutions evade supervision and pursue profits. At the same time, when the innovation of financial institutions endangers the stability of the financial system and the normal order of the financial market, the government will respond and further strengthen financial supervision, and financial institutions will seek and introduce new innovations under the new control.

The United States is the main birthplace of contemporary international financial innovation activities. Before the 1960s, financial regulation in the United States was mainly embodied in the banking law of 1933. In order to prevent the recurrence of the great crisis of 1929~ 193 1, the Banking Law authorizes the board of directors of the Federal Reserve to set a ceiling on the deposit interest rates of its member banks, stipulating that demand deposits and checking deposit accounts do not pay interest, and banks are not allowed to underwrite stocks and commercial corporate bonds. This was the Q-gauge known for its strictest control at that time. 1933' s banking law emphasizes safety, even at the expense of restricting competition and sacrificing efficiency. These regulations have seriously affected the operation of commercial banks and greatly reduced the source of funds for banks. With the rise of market interest rate, a large amount of funds flow into the stock and bond markets, and the survival of banks is seriously threatened. Banks have to do everything possible to bypass the limit of the highest deposit interest rate, so as to obtain loan funds and obtain higher profits. In this way, financial innovation designed for the survival of the financial industry came into being, and new deposit instruments and automatic transfer services (ATS) aimed at widely absorbing deposits, such as Eurodollar, Transferable Payment Instruction Account (NOW), negotiable certificate of deposit (CD), Money Market Deposit Certificate (MMC) and Small Savings Deposit Certificate (SSC), appeared. It can be said that deposit institutions are forced to bypass the Q regulation and create higher interest payments and disguised payments.

2. Relaxation of financial control policy (financial liberalization)-a suitable soil for international financial innovation after 1970s.

Great changes have taken place in the world economic situation since 1970s. At the same time, the continuous progress of computer technology and its rapid popularization in the financial industry, coupled with the rapid development of financial markets, have led to a wave of financial deregulation around the world, the so-called financial liberalization. The fundamental reason of financial liberalization lies in the drastic changes in the world economy and the popularization and application of computer technology, which makes it necessary and feasible for financial institutions and financial markets to confront and evade financial supervision, forcing monetary authorities in various countries to relax financial supervision.

First of all, in the middle and late 1970s, stagflation, high interest rates and oil crisis in western countries led to a sharp rise in global energy prices.

Due to the high inflation, investors first consider hedging the nominal income of hand-held assets, so the requirements for investment are higher and the liquidity of financial assets is reduced. In this case, the bank's original ceiling deposit interest rate and interest-free cheque deposit are convenient, so it can't absorb more deposits. Non-bank financial institutions that are not subject to interest rate control or loose control can use their own advantages to win more deposits, resulting in abnormal flow of deposits between banks and non-bank financial institutions. At the same time, the high market interest rate brought by high inflation encourages a large amount of funds to flow from controlled financial institutions to financial markets, forming a phenomenon of financial disintermediation, which seriously affects the operation and survival of the main body of the financial system.

Secondly, the spatial breakthrough of the international financial market makes the financial supervision of various countries unsustainable. The general trend of international financial market development in the late 1970s and early 1980s is the integration of domestic and international financial markets. On the one hand, the domestic financial industry, especially the banking industry, actively seeks to develop outward and realize the internationalization of the banking industry by setting up financial institutions abroad; On the other hand, countries have opened their domestic financial markets and allowed foreign banks to set up branches in their own countries. The Hunting Commission 197 1 and the Fan En Commission 1975 all made similar suggestions to the US government. First, cancel the interest rate ceiling in the Q regulation and the usury ceiling in each state, and cancel the provision that demand deposits do not bear interest. Second, in addition to commercial banks, mutual savings banks and credit cooperatives can also open checking accounts. Third, mutual savings banks and credit cooperatives can expand the use of funds, expand consumer credit, engage in commercial bank bills and bank acceptance bills, and relax restrictions on real estate credit business. The fourth is to relax the control of financial institutions.

On this basis, coupled with the gradual deterioration of the financial situation in the United States in the late 1970s, theorists gradually realized that the crisis in the late 1930s was not caused by excessive competition, but that the Fed failed to fulfill its responsibility as lender of last resort. The US Congress finally passed the deregulation and currency control bill of 1980, which abolished the interest rate ceiling, relaxed the sources of funds, allowed various interest-bearing checks to exist, and allowed financial institutions to use funds for business cross-cutting. 1980 Banking Law not only legally recognized the financial innovation before 1970s, but also contributed to the most important financial reform in the United States after World War II. After that, Japan, Britain, Canada, the former Federal Republic of Germany and other countries have relaxed their control over financial markets.

The process of financial liberalization is actually the process of financial deregulation in various countries, which is itself an innovation of financial system. This innovation provided a relaxed environment and policy and legal protection for the unprecedented prosperity of financial services, financial instruments and financial markets in the 1980s, and became one of the indispensable reasons for the rapid development of international financial innovation.

(b) Changes in the economic and financial environment

Since the 1960s, profound changes have taken place in the economic and financial environment of the western financial industry, and a large number of financial innovations have been produced to adapt to these changes.

1. Rising inflation and rising short-term market interest rates

Before the mid-1960s, inflation in the United States was relatively moderate. The average annual inflation rate in the United States was between 1.960 and 1.965, which was only 1.6%. However, since 1965, the inflation rate has risen sharply due to the continuous expansion of currency circulation by the Federal Reserve Bureau in line with the government's deficit fiscal policy. From 1965 to 1970, the annual average inflation rate rose to 4.2%, and from 1970 to 1975 to 7.3%. As mentioned above, the restrictions on the highest interest rates of various deposits in the Q Regulation have seriously restricted the absorption of deposits by various financial institutions and threatened the survival of the main body of the financial system. Therefore, financial institutions have begun to establish various new and more flexible financial instruments that are directly linked to market interest rates, such as "money market certificates of deposit" and "money market funds". At the same time, in order to avoid the operational difficulties and risks caused by interest rate fluctuations, financial institutions have created various tools to avoid risks, such as financial futures and interest rate swaps.

2. The accumulation of social wealth leads to an increase in public demand for high-yield financial products.

Due to the sustained growth of the world economy and the rise of national income after the war, on the one hand, the income of a few rich people has soared, and their ability to take risks and spread risks has gradually increased, so they have bought a large number of assets with high returns and high risks, and financial institutions have become their tailor-made financial products; On the other hand, many small depositors are limited by the excessively high starting point of purchasing financial products in the past. For example, most treasury bills are bought at the starting point of100000 yuan or100000 yuan. In order to attract these funds, many financial institutions carry out financial innovation and issue relatively small financial products, such as * * * mutual funds.

3. The economic cycle fluctuates frequently, and the financial market vibration intensifies.

Whether it is stock, bond or foreign exchange market, the market price fluctuates greatly, which generally increases the investment risk, and investors need new hedging tools. The innovation of new financial instruments came into being, such as stock price index futures and options.

4. Strengthening international economic cooperation and the trend of financial securitization

Since 1985, the amount of financing in international bond markets has exceeded that in the international credit market, and the international stock market has also developed rapidly. In addition, bank loans also adopt some characteristics of securities business, that is, banks can no longer keep loans until maturity, but can sell them in the form of securities in advance. This trend of financial securitization is developing rapidly around the world, which makes financial institutions' enthusiasm for financial innovation unprecedented.

(A) the intensification of competition in the financial industry-the external pressure of the innovation subject

The intensification of financial industry competition includes two aspects: one is the competition between banks and non-banks in the same country's financial system, and the other is the competition between financial industries in different countries.

First of all, electronic equipment and computers are common technologies that all financial institutions can use. Its application and the new clearing system and payment system reduce transaction costs and improve the level of financial competition, which makes any financial institution have the conditions and must get rid of traditional business, provide users with a wider range of financial services through financial innovation and maintain its own advantages in the competition.

Secondly, due to the changes in the form of savings and investment, the pattern of financial markets has been re-divided. The changes in foreign exchange market, money market and capital market have produced innovative demand for transferring exchange rate risk, interest rate risk and stock price risk, and the changes in credit market have produced innovative demand for transferring credit risk. Financial market has changed from seller's market to buyer's market. Only by restructuring the traditional business can financial institutions gain more market share in the traditional market, and actively explore off-balance sheet business and international business, create new financial products and new business markets, and increase profits.

(B) the pursuit of profit-the internal motivation of the innovation subject

Increasing the profit of financial innovation is the most common and direct motivation for financial institutions to engage in financial innovation. As microeconomic entities, financial institutions have their own target constraints, such as their own growth rate, current assets ratio, capital ratio and so on. As long as the external environment changes these constraints and there is an opportunity to maximize profits after deducting innovation costs, financial institutions will innovate. For example, since the late 1970s, financial management departments have encouraged and required banks to maintain low leverage ratio in their operations, so that banks have rapidly launched innovative businesses such as note issuance facilities (NIFs), forward interest rate agreement (FRAs) and swaps, which can increase their income without affecting the balance sheet composition.

(C) Avoiding regulation-the external manifestation of the profit-seeking nature of the innovation subject.

Financial supervision and financial innovation are a pair of contradictions. The purpose of financial supervision is for the stability and security of the financial industry, which usually sacrifices the efficiency of financial institutions. The purpose of financial innovation is profit, and profit usually affects the security of the financial system. Therefore, evading supervision is closely related to the intrinsic motivation of financial institutions to pursue profits.

(D) the development and changes of the market-the demand stimulation of innovation subjects.

Economic development leads to the change and expansion of the market, thus promoting the demand of the global financial market. This demand is mainly manifested in three aspects: first, the demand for banks to provide cross-border international financial services after the rapid development of multinational companies; Second, the demand of a government to raise funds by issuing government bonds through the financial market; Third, after the diversification of personal consumption, financial institutions are required to provide more efficient and faster financial services. These demands are the profit growth points that financial institutions are looking for, and the resulting financial innovations such as multinational banks, syndicated loans, international bonds, e-banking, credit cards and ATMs can just meet these demands.

Technical conditions for promoting international financial innovation [2]

Without the guarantee of mature technical conditions, contemporary international financial innovation will not develop so rapidly. It is the emergence and wide application of new technologies that make contemporary international financial innovation develop and improve in quantity and quality. The development of this new technology is mainly manifested in the development of computer, communication technology, information processing and automation technology.

(a) The development of new technologies is a promoter of financial innovation.

First of all, the application of new technologies such as computers and modern communications has greatly reduced the transaction costs of financial institutions. The application of new technology can make financial institutions realize economies of scale in their operations, make the marginal income of each new economic business greater than the marginal cost, and maximize profits; The application of new technology leads to the emergence of new clearing system and payment system, which improves the efficiency of financial transactions and expands the scope of financial transactions; The application of new technology makes financial transactions break through the limitation of time and space, making it possible to use a large number of innovative tools.

Secondly, the application of new technologies such as computers and modern communication has created a global financial market. Due to the application of large-scale trading networks and computers, providers of financial innovation can directly or indirectly connect with consumers in the original scattered and single market, which accelerates the combination of supply and demand of financial innovation, expands the promotion scope of financial innovation products and encourages financial institutions to carry out financial innovation.

Third, the application of new technologies such as computers and modern communication enables financial innovators to design financial instruments with relatively complicated technical requirements and set their prices reasonably. At the same time, they constantly observe and monitor the risks brought by operating innovative tools and design corresponding measures to transfer these risks.

(b) The use of new technologies determines the process and scope of financial innovation.

First of all, the application cost of new technologies such as computers and modern communication determines the cost of financial innovation. With the continuous development of new technology, its application cost is decreasing, and the financial innovation cost of financial institutions is also decreasing, thus accelerating the pace of its innovation.

Secondly, the application of new technologies such as computers and modern communications has increased the income of financial institutions engaged in financial innovation. By using these new technologies, financial institutions can open up many new businesses, such as indexed currency option bills, automatic transfer services, cash management accounts, swing accounts, information consulting services, credit cards and other intermediary businesses, which not only increase income, but also expand the scope of financial innovation.

Third, the application of new technologies such as computers and modern communications has accelerated the process of business diversification of financial institutions. Under the influence of the information technology revolution, enterprises and individuals have realized the importance of grasping information in time, and customers' requirements for obtaining information are getting higher and higher, which urges the business of financial institutions to develop in the direction of multi-function integration. For example, the application of information technology has expanded the functions of banks, which can provide customers with 24-hour services through ATM and e-banking; Electronic fund transfer system is widely used in fund transfer, securities trading and foreign exchange trading.

In short, the new scientific and technological revolution has completely changed the traditional concept and business of the financial industry around the world. As long as there is new technology, it will be accompanied by innovation in business and services. It can be said that the new scientific and technological revolution not only led to the development of financial innovation, but also changed the whole financial system.

To sum up, the rapid development of international financial innovation is the result of many factors, among which the pursuit of potential profits by innovative individuals at the micro level is the internal cause; It also includes the pressure exerted by the environment of macro-innovative individuals, which is an external cause; At the same time, the development of new technology provides technical support and guarantee for accelerating the internal and external factors of financial innovation, and is an indispensable "financial innovation catalyst".