Huru Ban: Financial innovation should avoid market failure

This newspaper Hangzhou Electric is holding in Hangzhou "2009 China Quantity Finance and the Financial Innovation International Symposium", The Economist, the Shanghai Stock Exchange Research Center director Professor Huru Ban proposed, our country should guarantee the financial innovation success, must avoid the market failure and optimizes the macroscopic environment. He said that a modern financial history is a history of financial innovation, but also a financial innovation risk control and supervision system in constant trial and error and from the practice of continuous learning and evolution.　　Regulation is not equal to regulation and prohibition, we must make efforts to optimize China's financial innovation system, system and policy environment, untie the necessary financial innovation, avoid being unworthy, avoid excessive regulation and government agencies to take over. In expounding the choice of financial innovation strategy in China's capital market, Huru Ban said that we should accelerate the innovation of standard financial derivatives in the field, build up the world's leading capital markets and international financial centers, and support China's development as a financial power. For example, without developed spot securities markets and derivatives markets, foreign investors would not be able to facilitate asset allocation and risk management, and the renminbi could hardly become a true international reserve currency.　　Without successful and quantitative financial innovations, all of this will be impossible. Huru Ban stressed that to ensure the success of financial innovation in avoiding market failure, we should focus on establishing a reasonable market supply and demand mechanism and incentive mechanism, choosing appropriate new financial instruments to ensure that the market has sufficient liquidity and adequate supply flexibility. In the initial stage, the standard derivative market, which is similar to the perfect competition situation, is used to eliminate the risk of excessive speculation and blind speculation in the product design, to ensure the market is highly liquid and not easy to manipulate, to cultivate mature, rational, professional and compliance investment behavior to ensure the healthy and effective market.