excessive "innovation" and hidden dangers
people generally attribute the current financial crisis in the United States to the bursting of the real estate bubble, but the decline of more than 2% in the US housing market so far should not be enough to knock down financial giants such as Bear Stearns, Lehman Brothers, AIG and Fannie and Freddie. Among them, the over-inflated financial derivatives undoubtedly played a role in fueling the flames and played the role of "giant killer".
Zuo Xiaolei, chief economist of Galaxy Securities, said that subprime loans brought credit products to some groups with low or no credit, and attached many preferential conditions to increase credit risk, thus forming a huge credit bubble. From credit bubble-product bubble-capital bubble-price bubble-market value bubble, a long bubble chain was formed through derivatives. Complex financial derivatives and long sales chain make investors fail to see the essence and root of mortgage loans. Moreover, the abuse of financial derivatives lengthens the trading chain and encourages speculation.
Poor supervision makes a disaster
Wu Xiaoling, deputy director of the NPC Financial and Economic Committee, pointed out sharply that the current subprime mortgage crisis in the United States reflects the supervision problem, that is, the financial innovative products facing the public deviate from the basic economic principles: First, the basic products of credit derivatives violate the principle of bank credit repayment, and do not pay attention to the borrower's first repayment cash flow, but rely on collateral; Second, derivative products violate the principle of letting customers fully understand financial risks, resulting in unlimited accumulation of risks, which is beyond the tolerance of market participants.
she stressed that the financial market should pay attention to the supervision of basic products in the future. "Developing credit derivatives without paying attention to the risks of basic products is to build the building on the beach; The securitization of credit products cannot be completely removed from the balance sheet, and there should also be capital constraints. "
Cao Honghui, director of the Financial Market Research Office of the Institute of Finance, China Academy of Social Sciences, pointed out that when designing the financial market system, especially developing financial derivatives, we must fully realize the dual nature of derivatives. We should strengthen supervision and control risks in response to the development of derivatives market. For example, when formulating various policies, strictly control the upper limit of leveraged transactions to avoid excessive use of leverage and avoid the spread of single market risks to other markets.
China should be cautious in financial innovation
Jacky Jiang, assistant to the chairman of China Securities Regulatory Commission, said recently that the subprime mortgage crisis in the United States warned us that financial innovation must be moderate, coordinated with market acceptance and investors' tolerance, to ensure that risks can be measured and controlled, and China's futures market innovation should be promoted more steadily.
Hu Yuyue, director of the Securities and Futures Research Institute of Beijing Technology and Business University, said that unlike the United States and other western developed countries, China currently has too few derivatives tools, so we should not hold back our financial innovation because of the US financial crisis. However, we should fully consider the gains and losses of financial innovation and try to avoid mistakes. "After the outbreak of such a serious financial turmoil in the United States, it is understandable that financial innovation should slow down appropriately."
"China should learn from the lessons of American regulation, instead of closing the door to further developing derivatives." Wu Xiaoling said that any derivative product can only spread risks but can't reduce them. Without risk takers, there would be no financial market, but it is the responsibility of supervision to limit the leverage ratio of speculators. "To limit the innovation of derivatives, we should limit the re-derivation on the basis of derivatives as much as possible so that customers can understand the real financial risks."
Li Yang, director of the Institute of Finance of China Academy of Social Sciences, said, "The subprime mortgage crisis has warned us that financial derivatives will become a channel for risk dissemination while preventing risks. In view of this, China should also be cautious in the process of actively promoting financial derivatives. "