Brexit Implications on Capital Market and International Financial Governance

This paper assumes as a focal point the concept that the ＂post-Brexit＂ may represent a change of era for European and global financial service and particularly for capital market sector. The change of era produces new ＂global systemic interrelation＂ in which financial globalization, governance and regulation will give place to new, largely unknown complexities. In general, the different interests and immediate priorities of euro and non-euro countries, coupled with a need for prompt and, at times, politically sensitive action, have had the result of a greater fragmentation or a differentiated integration in EU governance in the financial sector. On this assumption, we may say that the post-Brexit scenario is in some way preceded by a series of ＂fractures＂ in European governance. The direct effect of the post-Brexit era is that UK regulated financial entities will still need ＂passporting＂ across the EU single market： UK is going to vest the role of third party country, which will require an ＂equivalence regime＂ similar to the ＂substituted compliance＂ used in the same direction by US regulators. At the same time, while an equivalence regime may work in principle to deal cross-border issues at the global level, in the long term, it may be an instrument for a ＂battle of ideas＂ in the new political arena of global financial governance.

The Formation and Development of Modern Firm Financial Governance Theory

This paper points out the drawbacks of traditional financial governance. After introducing Chinese and western economists＇ researches on firm financial governance theory, we put forward modern finn financial governance system, which is based on the core of finance-rights allocation. In our opinion, the theory of finance-rights is the important cornerstone of the theory of financial finance-rights theory. Financial governance structure system is the basic framework of the research of financial governance.

The embedded financial governance system based on COSO framework A new method of integration

The global financial crisis is spreading at an alarming rate across the world. The speed of the spreading and its tremendous impacts to economic is unprecedented in half a century. Through researching its impacts to finance, the authors can clearly find that to a large extent most enterprises went bankrupt and closed down because of the weak financial governance system and lack of effective control to internal financial operation Based on this background, the authors analyzed the problems of the traditional financial governance, and tried to find solutions. Applying the concept of COSO （The Committee of Sponsoring Organizations of The National Commission of Fraudulent Financial Reporting） framework into the financial governance system, the authors can reconstruct the embedded financial governance system based on COSO framework, and better control the company＇s financial activities. In this way, the enterprise can effectively improve its management level and operational efficiency, and promote its sound and sustainable development.

China and Emerging Economies in Global Financial Governance:Legitimacy,Accountability and Democracy

Global financial governance refers to the way in which global financial affairs are managed. As there is no global government, global financial governance typically involves a range of actors including states, as well as regional and international organizations aimed at negotiating responses to problems that affect more than one state or region, far from only providing the public good of financial stability through global economy integration and global financial legislation. In geopolitical context of the 21 st century, emerging economies still have maintained a low profile in global financial governance, despite their growing economic power and the rhetoric of being a responsible great power, and there is little evidence that they will seek international leadership. Moreover,compared to the other emerging powers in the BRICS(Brazil, Russia, India, China and South Africa) group,China has under-participated in global governance in terms of contributing personnel, finance and ideas to major multilateral institutions and programs. It is really an interesting question in international economics and politics area. Firstly, this paper examines comparative data on the emerging economies countries' participation in global financial governance and explains the reason why China has relatively low involvement in global financial governance. Secondly, this paper analyzes norms and legitimacy in global financial governance, and thus outlines the emerging economies constraints on public policy of global financial market integration in the light of the foregoing analysis of legitimacy, accountability and democracy. Finally, some global financial governance development strategy and possible policy solutions are discussed as well.

BRICS Mechanism and International Financial Governance Reform

The global financial crisis in 2008 thoroughly exposed the shortcomings of the existing international financial system, followed by rising initiatives on the international financial governance system reform. Unlike previous reforms, emerging economies as a group have gradually become an important participant in the current round of international financial reform, especially with the BRICS countries as the main representative. This paper argues that the BRICS mechanism is in a trial period, and whether it is capable to form a cohesive institutional actor to participate in international financial governance, and to completely change the long-term situation of international financial affairs dominated by developed countries under the framework of the G-20 depends on whether BRICS member states can continue to maintain a rapid economic development, to create a strong convergence of interests and to maintain a relatively closed nature of the mechanism.

The Dimensions and Management of China-US Financial Competition

During a period of profound adjustments to the international power structure,China-US financial competition may intensify and lead to a crisis for the international financial system and even the international power system.The China-US financial relationship is structured in mainly four dimensions:the international monetary system,bilateral financial exchanges,the international financial system and the construction of international financial and/or economic concepts.Management of this competition relationship is thereby four-pronged:managing the relationship between the RMB and the US dollar in the international monetary system,the China-US bilateral creditor-debtor relationship,the indirect China-US relationship in global financial governance organizations and normative frameworks,and the divergence of both countries in regard to their economic ideologies.In particular,to stabilize the international monetary system,China should postpone the strategic confrontation between the RMB and the US dollar,strengthening their complementarity and cooperation based on market choice and their monetary function.Meanwhile,China should be prudent as a creditor to the United States,neither coerced by its over-reliance on American financial markets,nor tempted to weaponize the US debt by dumping US bonds.Also,before aiming for systematic reforms,China should first aim to become a stakeholder in the current global financial governance system by comprehensively accepting and becoming deeply integrated into it.Finally,China should avoid the economic competition model between China and the United States,and should instead apply the“Chinese Approach”to better facilitate solutions to international problems.These approaches to crisis management aim to help China endure this turbulent period of the international power system with more prudent strategies and policies,and to maintain a relatively stable international financial and economic environment for the sustained rise of its economy and for the rejuvenation of the Chinese nation.

全球金融治理:赤字膨胀和必要改革

In recent years,due to the complex interplay of cyclical,structural,geopolitical,geoeconomic,and public health factors,the demand for global financial governance(GFG)has risen to new heights.The global foreign exchange market is undergoing disruptive adjustments;low-income countries are rapidly approaching a debt crisis;the gap in international development finance is widening;and the ongoing Ukraine crisis threatens to fragment and fracture the global economic and financial system.However,the current GFG system cannot address the above issues responsibly and effectively.This is largely because the system is a loose cooperation web based on soft laws instead of a closely integrated mechanism guided by hard rules.Reform on multiple fronts is required to improve the quality and relevance of GFG.This includes refocusing on key issues and ensuring that the system functions as a whole,prioritizing development,modernizing the international debt resolution framework,advancing the reform of international financial institutions,and thinking outside the box.Despite China’s late entry into the GFG system,it is an ardent advocator of international development cooperation,an active promoter of green finance,and a responsible participant in international efforts to address the debt crisis.With its Belt and Road Initiative,Global Security Initiative,Global Development Initiative,and unique path to modernization,China has offered the world an alternative development path while breathing new life into the old GFG system.

Assessing Local Government Debt Risks in China： A Case Study of Local Government Financial Vehicles

Strong credit expansion in China after the recent global financial crisis has brought local government financial vehicles （LGFV） into the spotlight. Rapid growth of LGFV has triggered concern about local government indebtedness, banks＇ asset quality and, more broadly, China＇s medium-term financial stability and sovereign risk. This paper constructs a unique frm-level dataset to evaluate the country ＂s local government debt. We find an uneven distribution of LGFV, which are concentrated in the coastal areas, and a deterioration of their debt repaying ability from 2010 to 2012. We use principal component analysis （PCA ） along with multivariate discriminate analysis （MDA） to identify the credit risk of LGFV based on conventional financial variables as well as local governments ＇fiscal status. We also estimate the safe boundaries of debt bearing at the provincial government level. The estimations reveal more severe local government debt risks in the middle-western provinces and higher risks associated with LGFV at the municipal and county levels. Although it is very unlikely that there will be a national debt crisis in China, the high risk of LGFV should be noted and effectively controlled by improving the fiscal transparency of local governments and reforming the fiscal system.