The complex financial system is based on risk control and risk management. Morton believes that a financial system must have derivatives, and the more kinds, the better, which can involve all levels of the financial system. If there is no risk in the financial market, it cannot be a real financial market. The main function of derivatives is to transfer risks.
Morton said that financial derivatives are the most important risk transfer tools, and there are three ways to avoid risks, namely diversification, hedging and insurance. "Futures tools are one of the most important hedging tools, and many risk pairs have been washed away. Hedgers hedge their unnecessary risks. Yeah. But the hedger must have a counterparty to trade with in order to hedge. Opponents are all speculators. Speculators bear this risk through some of their own algorithms, thus earning a certain profit. "
In Morton's view, balancing the market needs to introduce more types of participants, rather than driving them out of the market. "In order to run the financial market smoothly, we must find enough speculators for hedgers. If there are too many speculators or hedgers in the market, the market itself will not run smoothly. But if there are too many speculators, we need to improve this market, introduce more hedgers, let them join this market, and make the market more dynamic. We need to balance this market from this direction, instead of driving all speculators out of the market. "
How to prevent derivatives from generating risks? Morton believes that this market cannot be stopped or many functions of this market cannot be lost. "You need to better educate investors and let them have a deeper understanding of this market in order to make the market run more smoothly. In fact, what needs to be done is the matching of income and risk operation. In the derivatives market, it is mainly to control risks, but the construction of this market will continue to operate. "
"For example, some market operations are not very standardized, and this market can be phased out, but market development still needs to run. Any form of innovation has certain risks. What we need to do is to build a strong foundation with this innovation and let innovation play a greater role. " For example, Morton further said, "For example, like the high-speed rail, if the rails are not upgraded, in this case, the high-speed rail cannot be allowed to run too fast. Market infrastructure projects have not been well upgraded, so it is necessary to slow down the operation speed, otherwise risks will arise. But if you think that the rails have not been upgraded and you have been driving new trains at the old speed, then you will not enjoy the convenience brought by the high-speed rail. "
"A very sound financial system is very, very important for economic growth. China will soon become the largest economy in the world, "Morton said, adding that China has made great progress in RMB internationalization, including the development of derivatives market. "In 2008 and 2009, many changes have taken place in the global financial system. In fact, what we have to do today is to rebuild this financial system from a more basic level and let it have a more perfect development. " _ end