Answer: (1) Financial innovation and financial liberalization. Financial liberalization refers to the trend of full operation and fair competition in the financial system and financial market after Western countries generally relaxed financial controls in the 1980s.

Financial innovation and financial liberalization promote and influence each other. Financial innovation has had the effect of loosening financial controls and led to financial liberalization. Financial innovation has caused the original financial control measures to lose their due effectiveness, so financial regulatory authorities in various countries have to cancel control measures. Therefore, it can be said that financial liberalization is the result of financial innovation. Financial liberalization provides a more relaxed environment for the further development of financial innovation and promotes the development of financial innovation.

(2) Financial innovation and financial risks. On the one hand, financial innovation has the function of transferring and diversifying financial risks; on the other hand, financial innovation also brings new financial risks.

From the perspective of the transfer and diversification functions of financial innovation on financial risks, financial innovations such as floating-rate notes, financial futures, transferable loan contracts and asset securitization have avoided various risks. From the perspective of financial system innovation, financial system innovation is not only conducive to transferring financial risks, but also conducive to strengthening the supervision of the financial industry, reducing risks in the financial industry, and maintaining the stability of the financial system.

However, while financial innovation transfers and disperses risks, it also creates new risks. Manifested in:

First, financial innovation increases the operating risks of financial institutions. Financial innovation has homogenized financial institutions, intensified competition among financial institutions, and narrowed banks' traditional deposit and loan interest rate spreads. Financial institutions have to engage in high-risk businesses, which leads to an increase in financial institutions' operating risks and a decline in their credit ratings.

Second, financial innovation increases off-balance sheet risks. That is, risks arising from behaviors that are not reflected in the balance sheet but may be converted into real liabilities of the bank. With the development and scale of off-balance sheet business, financial companies' off-balance sheet risks may turn into real risks at any time. At present, among commercial banks in Western countries, especially the United States, the scale of off-balance sheet business has exceeded that of on-balance sheet business. The profits created by off-balance sheet business are becoming a new profit point for financial institutions, and the risks of off-balance sheet business have also become a new profit point for financial institutions. important source of risk.

Third, financial innovation promotes financial homogenization, liberalization and internationalization. The interdependence between a country's financial institutions, between domestic financial institutions and foreign financial institutions, and between domestic financial markets and international financial markets has increased. Any errors in the financial system will affect the security of the entire financial system. This is the so-called "partner risk".

Fourth, financial innovation provides new means and venues for financial speculation. Financial innovation is two-way, which not only increases the liquidity of the financial market and provides new financial products, but also creates the possibility of greater speculative activities.