Causes of the global financial crisis: 1. Loose monetary policy and fiscal deficit stimulated excessive consumption by American residents and highly leveraged operations of financial institutions, resulting in asset price bubbles.

In 2000, the U.S. Internet economic bubble burst.

In order to stimulate the economy, the Federal Reserve lowered the federal funds rate 13 times, until the historical low of 1% from June 2003 to June 2004, which enabled companies, financial institutions and residents to finance and borrow at very low costs.

The continued rise in housing prices has convinced American residents that buying a house is a risk-free investment, and the demand for housing has expanded significantly, which has promoted a large increase in debt and increased leverage ratios of financial institutions, leading to the rapid expansion of asset bubbles in the financial market.

The "wealth effect" caused by excessive asset prices has further stimulated excessive consumption in the United States.

In addition to monetary policy, the deficit fiscal policy and large-scale tax cut plan implemented by the United States not only stimulate economic growth, but also leave hidden dangers for the expansion of asset price bubbles.

After 2001, on the one hand, the U.S. government carried out large-scale tax cuts to promote the growth of household consumption; on the other hand, it launched two wars in Iraq and Afghanistan, and government spending continued to expand.

The economic growth structure became further unbalanced until the crisis broke out.

2. The freedom-centered regulatory concept, loopholes in the regulatory system and insufficient regulatory means have gradually accumulated risks in the financial system, which are important reasons for this crisis.

Policymakers and supervisory authorities in developed financial markets failed to fully assess and eliminate the risks that were accumulating in financial markets, and failed to keep up with the pace of financial innovation in a timely manner and take effective supervisory actions.

For a long time, the United States has pursued a free market economy and placed too much faith in the self-discipline and self-adjustment capabilities of the market, subjectively resulting in a lack of and lax financial supervision.

In May 2005, in the face of public opinion questioning the proliferation of derivatives and requiring the Federal Reserve to intervene in the supervision of subprime mortgages, Greenspan, then chairman of the Federal Reserve, believed that self-regulation of financial markets was more effective than government regulation and firmly opposed the government's strengthening of financial regulation.

On October 23, 2008, when Greenspan testified before Congress on the financial crisis, he had to admit that he had "assumed that self-interested banks and other institutions were willing and able to protect their investors, the bank's assets, and the bank's survival."

The opposition to regulating financial derivatives is "partly wrong" and acknowledges the flaws of a free market that lacks regulation.

In addition, there are also loopholes in the U.S. financial regulatory system, leading to misalignment and lag in supervision.

Since the passage of the Financial Services Modernization Act on November 4, 1999, the U.S. financial industry has entered a stage of mixed operations with innovative innovations. However, financial supervision still follows the old system and has failed to keep up with the pace of financial innovation.

Before the financial crisis, there were duplications of supervision in some areas of the U.S. financial industry, but there was a regulatory vacuum in other areas, making it difficult for regulatory agencies to achieve effective coordination.

For example, there are multiple departments responsible for the supervision of the banking industry, but hedge funds and private equity investment funds are in a regulatory vacuum.

In terms of supervisory skills and means, there are also big flaws.

Financial innovation has led to increasingly opaque risk distribution, increasingly complex identification, classification, and assessment of risk concentration, and increasingly difficult risk measurement.

A large number of over-the-counter transactions in financial derivatives have led to an increase in the off-balance sheet business of financial institutions. The transparency of financial institutions' accounting statements and the accuracy of various data have been greatly reduced, especially the true market value of derivative financial products and the resulting profits and losses.

Financial regulatory authorities failed to make correct judgments on risks in the financial system in a timely manner.

More than half a year after the subprime mortgage crisis broke out, the U.S. government acknowledged regulatory loopholes and worked hard to fill them.

In March 2008, the U.S. Department of the Treasury produced a financial regulatory reform blueprint, the core of which was to strengthen the Federal Reserve's dominant position in prudential supervision.

3. There are flaws in the governance structure of financial institutions. They ignore risk control, pursue short-term interests, and lack a check and balance mechanism, laying hidden dangers for the outbreak of the crisis.

Well-known financial institutions in major developed financial markets have serious deficiencies in corporate governance and risk management.

Some board members are composed of close friends of the CEO who have no industry experience or expertise. They cannot effectively guide the strategic positioning and business development models of these institutions. They lack sufficient restraint on management and have no effective risk management and internal control systems.

The construction did not play a positive role.

The boards of directors of these financial institutions have allowed management to pursue short-term profit maximization while neglecting proper assessment and effective management of risks. Even fraudulent asset underwriting and operating behaviors have been condoned and even tolerated in the pursuit of market share, business growth and short-term bonuses.

encourage.

It is even more difficult to talk about the integrity responsibilities of financial institutions to stakeholders and society.

Such "gentleman's club" corporate governance cannot prevent senior management from overexpanding risky businesses motivated by short-term interests.

In fact, under the pressure of financial institutions generally making huge profits in the past few years, managers who did not dare to take risks faced the risk of being replaced.

The accumulation and outbreak of risks actually come from the management's active or passive business behaviors.

4. Innovative products with imbalanced risks and returns have given rise to financial crises, and over-the-counter derivatives with lack of supervision have exacerbated market turmoil.