Since the beginning of this year, the national economy has continued to grow rapidly, consumer demand has increased steadily, the income of urban and rural residents has increased steadily, foreign trade has grown strongly, and fiscal revenue has increased substantially. The current financial operation is generally stable. However, it is worth noting that there are still problems in economic operation, such as excessive expansion of investment demand, rapid growth of money and credit, and increasing inflationary pressure.
According to preliminary statistics, at the end of March, the balance of broad money M2 was 231800 million yuan, a year-on-year increase of19.2%; The balance of local and foreign currency loans of all financial institutions 17.90 trillion yuan, up 20.66% year-on-year. In the first quarter, local and foreign currency loans increased by 9 122 billion yuan, of which RMB loans increased by 834.2 billion yuan, an increase of 23.8 billion yuan year-on-year. In order to prevent the excessive growth of money and credit, causing inflation or asset price bubbles, forming new non-performing loans of banks and preventing financial risks, the People's Bank of China began to take some policy measures, including raising the reserve ratio by 0.5 percentage points again from April 25th, and implementing the differential reserve ratio system and the floating interest rate policy for refinancing. In addition, the People's Bank of China raised the central bank's refinancing rate and rediscount rate.
From the macroeconomic point of view, the main problems that need to be studied in the current macroeconomic situation in China are as follows: First, the money supply has increased rapidly, and the actual data of M 1 and M2 have been higher than the forecast since this year; The growth rate of credit is relatively fast, which is 10 percentage point higher than expected at the beginning of the year. The policy of raising the deposit reserve ratio will help to control the speed of money supply and loan increase and ensure the smooth operation of the financial market. Second, the proportion of direct financing in China is still too low and the proportion of indirect financing is too high. Although developing countries generally have the problems of underdeveloped securities market, difficulty in direct financing of enterprises and inconvenience in direct financing, such a high proportion of indirect financing brings certain difficulties to asset-liability management and risk control of the whole society. Third, the proportion of M2 in GDP is too high. By 2003, the proportion of M2 in GDP in China was close to 200%, which was not found in the world except a few countries. Although there are some particularities in China's economy, the excessively high M2 indicates that the financing in China's economic development relies too much on the banking system and the risk concentration is high. Fourth, the total savings rate is still high. In 2003, China's total savings rate further rose to 47%, economic growth was mainly driven by investment, and the proportion of consumer demand needs to be further improved. All the above problems need further study and discussion, and the solution of these problems can not be separated from the development of financial markets.
Two, since the reform and opening up, China's financial market development has made important progress.
First, the financial market system was initially established. At present, China has basically established a securities and futures market, a money market and an inter-bank foreign exchange market. Secondly, the participants in the financial market are increasingly diversified, including commercial banks, social security funds, trust companies, insurance companies and securities companies. Since 2003, the introduction of Qualified Foreign Institutional Investors (QFII) has played an important role in the development of China's financial market. Third, the market products are gradually diversified, including not only financial bonds, government bonds, central bank bills, corporate equity and debt bonds, but also securities and banking products. There is a strong demand for innovative banking products such as ABS, MBS and CDO and innovative securities products such as open-end funds. Fourth, cross-market financial innovation products are constantly emerging, such as the emergence of money market funds and the development of bank credit asset securitization.
However, compared with developed countries, China's financial market still has the problems of product shortage and singleness, the financial deepening is not enough, and there are still phenomena and problems of innovation inhibition in many aspects.
The continuous development of economy and the deepening of opening to the outside world require the further development of China's financial market and the relevant departments to adapt to the situation and change their concepts. At the same time, financial products will inevitably change accordingly.
First of all, with the end of the transition period of China's entry into WTO, the realization of national treatment and the gradual relaxation of market access, the international competition faced by the financial industry will further increase. The commitment of joining the World Trade Organization and the need of China's own economic development require China to accelerate the development of its financial market. Secondly, with the gradual opening of the market and the continuous advancement of economic globalization, China's economic and trade dependence has reached 60% in 2003. More and more enterprises are involved in international business, which objectively requires China financial institutions to provide a series of financial services including hedging, risk control, foreign exchange financing and so on. The continuous expansion of market demand provides opportunities for the development of financial markets and financial products. Third, with the deepening of opening to the outside world, China will further improve the exchange rate formation mechanism, gradually abolish inappropriate foreign exchange control measures, and finally realize the convertibility of RMB capital account, which requires the further development of financial markets and the further diversification of financial products. This point is clearly stated in the relevant documents that it is necessary to develop an all-round and multi-level financial market system.
As a developing country and a country with economic transition, although China has encountered some setbacks in the process of financial product innovation, we must pay full attention to financial product innovation in the future, and we must not give up food because of choking. In this process, in order to deal with the interaction between the accumulation of practical experience and sound rule-making, we can adopt positive list and negative list to supervise financial innovation products.
In the early stage of China's economic opening from 1980s to 1990s, due to the shortage of talents, backward technology, weak management and lack of supervision, China once took some detours in financial product innovation, which led to the abolition of some products and the closure of problematic financial institutions. Financial products, like products of other industries, also need to go through a certain process of learning, talent training, system growth, market maturity and regulatory development in the process of innovation. When some conditions are not mature, some risks may arise. In addition, the closure of problematic financial institutions has also exposed some weak links in China's legal system. For example, there are still considerable problems in bankruptcy closure.
Of course, different decision-making departments and different experts and scholars will have different views on the regulatory thinking and development of financial product innovation. Among them, one view holds that due to historical detours, when developing new financial products, we must first establish rules and fully learn from international experience. There is some truth in this statement. But there are also some problems in practice. First of all, the international experience and lessons are different, and there are significant differences between different countries, such as the Anglo-American model, the continental European model, and the Korean-Japanese model, which need further analysis, judgment and choice.
In addition, it often takes a long time to establish rules on the basis of lack of practical experience, and even it cannot be promulgated all the time. The operability and soundness of the established rules need further observation. Methodologically speaking, everything can be practiced only after establishing rules, which is also contrary to the objective law that human beings improve their understanding through practice. The methods that can be adopted at this stage may learn from the relevant practices of industrial policies and standardize and solve them by setting up positive lists and negative lists. For internationally mature products and financial institutions with strong risk control capabilities, a negative list method is adopted when carrying out innovative business, that is, "business varieties that are not explicitly prohibited by law can be developed". For those financial products that are not very mature and may bring systemic risks, adopt a positive list to regulate them.
In the process of financial innovation products, we should reasonably define the positioning of financial products. Pay attention to distinguish between products for institutional investors and products for individual residents. In view of the fact that institutional investors generally have institutional advantages, strong analytical judgment and anti-risk ability, the product authorization for institutional investors can be more relaxed. Financial products aimed at individual residents should be more cautious in access, and stricter in information disclosure and supervision. Among them, financial innovative products for high-end customers should be different from products for universal service. In addition, some financial innovative products, including derivatives, are more complicated in pricing and risk control, and need to be treated differently in supervision.
The development of financial innovative products will make it possible for financial institutions to change their asset-liability structure. Taking innovative banking products as an example, new financial products such as consumer credit, asset securitization, non-performing asset securitization and credit risk transfer have gradually emerged in the field of asset management. In the management of debtors, we can see the continuous emergence of savings substitute products, such as fund products, securities investment products, insurance products and so on. In addition, the development of intermediary business is in the ascendant. Internationally, people no longer regard banks as only institutions engaged in deposit, loan and foreign exchange business, but more people regard banks as the backbone of business and services with a huge network branch system, and more and more regard banks as sales and service networks with the ability to cope with a variety of products, and at the same time regard financial services as information processing services linked by electronic networks.
Five, the changing market demand and the emergence of cross products, more and more requirements to establish the concept of functional supervision, adapt to the situation, strengthen coordination.
After the establishment of China Securities Regulatory Commission, China Banking Regulatory Commission and China Insurance Regulatory Commission, China has basically formed a pattern of functional supervision, which has played an important role in the steady development of the financial industry and the effective prevention of financial risks. At the same time, it should be noted that the ever-changing market demand objectively requires the reasonable and effective allocation of financial resources between different markets. Therefore, we have observed that some cross-business requirements are gradually emerging. For example, corporate customers have more demand for investment, wealth management, value preservation and insurance business on the basis of loan demand, while individual residents have further demand for consumer credit, housing loans and even investment, wealth management and endowment insurance on the basis of deposit demand. The emergence and development of cross-business has brought new possibilities for changing the unreasonable proportional relationship between direct financing and indirect financing.
The cross of business varieties objectively requires institutions to have more comprehensive service functions. Judging from the current actual situation in China, the regulators actually adopted a default attitude towards the emergence and development of financial holding companies. It should be said that the extensive network branches and long-term special customer information of financial institutions have created opportunities for the development of cross-business. Therefore, we can observe that with the development of market demand and the demand for resources, some regulatory concepts based on who will issue the "birth permit" in the past have been impacted. In fact, there is no need to set up barriers between functional supervision, institutional access and business product development. With the development of economy, no matter who approves the establishment of the organization, it should not hinder the business innovation with market demand. Functional supervision and business development are not necessarily contradictory. Regulators have been adapting to the changing situation, changing their concepts and strengthening coordination. In addition, in order to maintain macroeconomic stability and coordinated development, the report of the Third Plenary Session of the 16th CPC Central Committee further clarified that coordination among the People's Bank of China, the Ministry of Finance and the three regulatory agencies should be further strengthened, and this trend has been reflected in relevant legislation.
Six, the inherent advantages of foreign banks make the development potential of foreign banks in China huge, and the development of foreign banks should meet the needs of the macro-financial situation.
Since the reform and opening up, more and more foreign banks have started to enter the China market, which has played an important role in the improvement of China's financial system and the development of the financial market. In the process of economic transition, foreign financial institutions have certain advantages in corporate governance, risk control, risk management, credit culture, decision-making procedures, incentive mechanism and asset management. Foreign banks have great room for development, especially in promoting the development of financial markets and products.
The development of foreign banks should also consider meeting the needs of China's macro-financial situation. In the process of economic transition, there are some differences in the development stages and development potential of different industries and regions. Foreign banks can pay more attention to the development of some weak markets, products and weak links in China's economic transformation, pay attention to the changes of economic structure, and support the development of the old industrial base in Northeast China and the construction of the northwest region, which not only competes with Chinese financial institutions, but also is a useful supplement to Chinese financial institutions. We also hope that foreign-funded financial institutions in China can better adapt to the needs of China's macro-financial situation, not only in the pro-cyclical stage, but also in the counter-cyclical stage, even during the crisis, and can persist in long-term operation and pursue long-term interests, which is also the topic discussed and studied at the meeting of the Bank for International Settlements in February this year.