Vietnam national university of economics and business
CHAPTER 3. LESSONS AND SOLUTIONS FOR COUNTRIES
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Khung-CTDT-TCNH-CLC, Ruot thang 4 (2)-99-102
CHAPTER 3. LESSONS AND SOLUTIONS FOR COUNTRIES3.1. LessonsLesson 1: A strong and well-managed financial system is the first line of defense against any financial storm. This lesson shows us the importance of financial supervision tools and the attention to building good basic foundations for the development of financial systems and markets such as the regulatory framework for supervision. and financial supervision organizations, the development of long-term investment institutions, credit ratings....The more open an economy is, the tighter the supervision of the market and financial institutions must be. Because the more open the economy, the higher the risk of business failure, along with the risk of credit risk. In addition, for good supervision or effective credit rating among financial supervisory agencies. Currently, transparent information and effective assignment and coordination among key supervisory agencies are especially important. Lesson 2: is a lesson about building and strengthening public trust Because many times the failure of a bank stems from the people's excessive panic. This lesson involves making good use of one control tool, deposit insurance. Deposit insurance organizations need to promote their role well to create public confidence in the banking and financial system and participate in preventing and handling risks in order to limit chain breakdowns. . The public has more confidence in the banking and financial system if they are aware that there is a financial institution acting on behalf of the Government that regularly monitors the credit institution to which they deposit money, not just making payments. send them the repository that organization is broken. More importantly, that trust contributes to political and social stability even in the event of a crisis. Lesson 3: subprime lending but lack of control mechanism is a double-edged sword As analyzed in the previous section, subprime lending by banks and financial institutions is allowed and encouraged by the US government. It's about helping low-income families to own a home. When the real estate market is efficient, home prices can rise, so they can sell their home and make the difference. Have the opportunity to buy a new home that is affordable and earn extra income. In return, banks and financial institutions enjoy higher lending rates to compensate for risks. A loose and unregulated lending mechanism where the government relies only on creating housing benefits for low-income people without taking into account their ability to repay when the real estate market goes down. People with low income and modest income who can't afford to pay back, buy the house with mortgage money to pay off the debt. Lesson 4: securitization of collateral is a huge but fragile capital creation mechanism While the control system is not timely, it has created a huge capital, but it is actually very fragile. Specifically, to support housing loans, the US government also established Fannie Mae and Freddie Mac. The main activity is to buy mortgage loans with real estate, especially "subprime" mortgage loans of banks, and then use real estate as collateral to issue "remortgage bonds''. sold to other investors to increase liquidity for the bank. Thus, housing loans have been "bonded" into common financial products that can be easily traded on the money market. Lesson 5: Excessive shorting magnifies losses and accelerates economic disruption when it occurs. Short-selling at a moderate level with control will be a catalyst to create stimulus for economic development. Excessive shorting will inflate losses, causing massive economic disruptions when it happens Lesson 6: The state has an indispensable and increasingly large role in the fight against cyclical or spontaneous economic shocks, especially the financial crisis. To control inflation, stabilize the macro-economy, and we'll implement policies on social security. Reform the economy, renovate the economic structure, develop an export-oriented economy, gradually reduce the trade deficit, move towards a balance of trade and trade surplus. Renovate the national financial-monetary system, apply appropriate monetary policy (sometimes tighten and sometimes loosen monetary policy depending on actual situation) , apply flexible foreign exchange rate, increase strong foreign currency reserves. Diversify import-export markets, do not focus too much resources on a few markets to suggest possible unpredictable fluctuations. tải về 195.42 Kb. Chia sẻ với bạn bè của bạn:
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