With the deepening of economic monetization, the basic needs of establishing an effective and adaptable trading and payment system have been met. A reliable transaction and payment system is the infrastructure of the financial system. Without such a system, high transaction costs will inevitably be accompanied by low economic efficiency. An efficient payment system is a necessary condition for social communication. The development of exchange system can reduce the social transaction cost and promote the professional development of society, which is a necessary condition for social development. Large-scale production has greatly improved production efficiency and technological progress. Therefore, modern payment system and modern economic growth go hand in hand.

2。 The financing function of the financial system

The financial intermediary function of the financial system contains two meanings. Mobilize savings and provide liquidity. Financial markets and financial intermediaries can effectively mobilize the whole society to save resources and improve the allocation of financial resources. This enables the initial investment to be quickly transformed into effective productivity technology. While promoting more effective use of investment opportunities, financial intermediaries can also provide depositors with relatively high social returns. The main advantages of financial intermediaries to mobilize savings are: first, they can spread risks, and a single investment project can provide investors with relatively high returns (compared with physical assets such as durable consumer goods). Mobilizing savings in the financial system can provide scattered social resources, gather resources and exert scale effect. Provide liquidity to the financial system, solve the source of funds for long-term investment, and may provide long-term investment and equity financing for enterprises, as well as funding channels for technological progress and venture capital.

3。 Detailed function of equity in financial system

Indispensable large-scale investment projects are divided into small shares for small investors to participate in these large-scale projects. Through the detailed function of equity, the financial system manager supervises and controls the company. In the modern market economy, the company has undergone profound changes, the equity is highly dispersed and the company is specialized. The biggest difficulty of institutions is information asymmetry, and it is difficult for investors to effectively supervise the use of funds. The function of financial system is to provide a new mechanism, that is, to strictly supervise the company through the role of external lenders, so as to protect the interests of investors internally.

4。 Resource allocation function of financial system

In order to raise enough investment funds, it is a necessary condition for economic take-off. The growth of investment efficiency and resource allocation efficiency is equally important. Distribution has its own difficulties, investment and productivity risks, and the rate of return of the project is completely unknown to the actual ability of the operators. These inherent difficulties require the establishment of a financial intermediary. In the uncertainty of modern society, individual investors are evaluated by companies and managers under difficult market conditions. The total risk of investors, the advantages of investing in social capital allocation and a more effective financial system provide investors with intermediary services and mechanisms. First of all, financial intermediaries that provide risk diversification, liquidity risk management, project evaluation and investment services can be expressed.

5。 Risk management function in financial system

Financial system with risk management function, trading and pricing of uncertain risks in long-term capital investment of financial system, and risk sharing mechanism. Because of the existence of information asymmetry and transaction cost, its role in the transaction of financial system and financial institutions has spread and transferred risks. Social risks cannot be solved, transferred and incorporated into a mechanism, and social and economic operation cannot be carried out smoothly.

6。 The incentive function of the financial system,

The incentive problem in economic operation is not only inconsistent, because of the economic interaction of individual goals or interests, but also because of the influence of other individual behaviors or information of economic entities that achieve goals or interests. The factors that affect the interests of economic subjects are not all under the control of subjects, such as the incentive problem caused by the separation of ownership and control rights of modern enterprises. There are many ways to solve the incentive problem, and the specific methods are used to influence the economic system and economic environment. It is the stock or stock option that solves the incentive problem in the financial system. If managers and employees hold stocks or stock options, the benefits of the enterprise will also affect the interests of managers and employees, so that managers and employees, enterprises trying to improve their performance, will not do so again. On the contrary, the interests of the owner will solve the principal-agent problem.

7。 Information function of financial system

Financial system refers to the financial market, including not only the prices of various investment products available to investors, but also the factors that affect these prices, as well as the financing cost of funds, and whether the rules for managing normal and various information in available financial transactions are observed, so that participants in the financial system can make their own decisions.

To edit this paragraph, you must have the ability of the financial system to realize its functions.

1。 Their ability to stabilize.

The competitiveness of a stable financial system is to cope with various potential threats and resolve financial risks, maintain financial security and maintain monetary stability, without excessive inflation or deflation, excessive distorted financing arrangements and excessive financial bubbles, and the ability of the financial system to stabilize. This is a very serious problem, the instability of the financial system. First of all, the disorder of pricing system destroys the real economic transaction order and disrupts the normal production and operation activities; Second, social credit will be affected, and normal financing activities will affect investment, thus promoting economic growth; Thirdly, people with unstable financial system have uncertain expectations, which easily lead to great destructive power of collective action and have a strong impact on normal economic activities. Maintain its own stability, so financial stability is the same as the overall material economy. Financial stability needs a crisis early warning index system and a mechanism for identifying, conducting, controlling and dispersing risks. Being able to cope with the normal operation of various pricing systems, the requirements of stabilizing price indicators such as currency, interest rate, exchange rate and stock price, the impact of unexpected events, and the need to enter the financial market and limit the business activities of microfinance institutions, so as to ensure their compliance; Financial system, regulatory rules and regulatory means required by macro-regulatory agencies.

2。 adaptive capacity

The function of financial system is that in a specific economic environment, it must adapt to the existence of the economic environment, and at the same time, in the ever-changing economic environment, it must be synchronous, adaptable and innovative. The adaptability of the financial system to a country's financial development should be placed on the basic function of the financial system that pays attention to system construction and coordinated development, rather than on the external structure of the financial system's market development and scale expansion. Otherwise, it may be impossible to talk about the development of the financial industry, resulting in a serious waste and distortion of financial resources. In addition, it is worth pointing out that the activities of the financial system exist externally: emphasizing the exertion of certain financial functions may sometimes expand its negative effects to raise prices, such as discovering the financial system, market integration, marketization of interest rates and exchange rates, etc., but they will increase market risks. The financial risk prevention system and decentralized function are not yet in place, so this will lead to instability and imbalance in macroeconomic development, and eventually turn to inhibit the normal operation of the price discovery function of the financial system. In order to ensure a good interactive relationship between financial development and the real economy, the financial system should not simply pursue the best investment and financing system and the scale and quantity of financial instruments, but should be able to balance the conflicts of interests and conflicts. On this basis, the six basic functions of the financial system can be effectively brought into play, thus promoting the steady growth of the real economy as a dynamic system optimization.

3。 service ability

The financial system must realize its function through its own actions. Apart from the initial necessary investment, it cannot rely on the continuous capital investment of the government or any individual. The financial system can exist for a long time, and the financial operating system must be capable. The extent to which financial institutions use economic resources to achieve their business objectives. The diversity of economic subjects leads to the diversity of business objectives, and the diversity of business performance aims at comprehensively reflecting the size and feasibility of the response. Financial institutions have the right to provide debt instruments to the society and use financial services or instruments such as credit assets, stocks and bonds to achieve business objectives. Financial institutions must rely on their own capabilities to perform their functions, rather than relying on continuous external resources. Operating ability is a necessary condition for the survival of financial institutions and the basis for sustainable development.

4。 Configuration function

The function of financial intermediary channel, in order to realize the function transfer of economic resources in time, space and equity refinement, the financial system must be able to price financial assets as liquid assets and assets with poor liquidity for optimal allocation. Therefore, the financial system should have the ability to allocate flow and price. The allocation efficiency of financial resources is the ability to provide financial resources and capital demand at the lowest transaction cost in the market, in other words, the ability to allocate limited financial resources to the most favorable enterprises and industries. The role of financial intermediaries in the allocation of funds is mainly based on the information advantages of financial intermediaries. The government-led investment and financing system, banks and enterprises should be closely linked in theory, especially the establishment of the main banking system in Japan, South Korea and other countries, which is very conducive to the information flow between banks and enterprises. Banks can make full use of this information to select good projects, and effectively supervise the travel expenses and allocate funds for projects to achieve higher efficiency. In order to improve the efficiency of capital allocation, financial intermediaries can take advantage of information and reduce a large amount of information through contractual arrangements to realize capital allocation. Information asymmetry, adverse selection and moral hazard mainly affect the efficiency of fund allocation. Information demand, increasing the proportion of self-owned funds or increasing mortgages and guarantees can reduce or even eliminate adverse selection and moral hazard. Banks provide information about the reduction or even cancellation of loans, and there are self-owned funds and mortgage loans between them to ensure the complementary relationship. Through various channels, banks, securities, insurance and other funds will be effectively guided from the savings field of the financial system to the investment field, so as to play the regulatory role of the financial system, promote the virtuous circle of funds in the real economy and realize the optimal allocation of resources.

5。 transmission capacity

The transmission path of economic macro-control in various countries transmits the financial system of policy intention and the transmission ability that the financial system must have to achieve this goal. The financial system is an important channel for the government to influence the real economic sector and promote economic growth. The reason is naturally the function of conveying policy intention, because it is inextricably linked with the economy of various departments and has the characteristics of convenient operation, easy measurement and controllability. Policies and measures transmitted through the financial system generally need to go through the following three levels: the first level is the financial system on the chain of monetary policy transmission, the second level is the financial system that affects the economy of the real economy sector, and the third level is the real contribution of the chain economy sector to economic growth. The ability of financial system to measure the timeliness, completeness and accuracy of policy intention transmission. Government policies and measures will produce good results only if they are delivered in time, otherwise, these policies and measures may be counterproductive in the ever-changing environment. Honesty is the policy intention of all governments to carry out economic activities, and some of them cannot be omitted, otherwise the expected policy effect may not be achieved. Accuracy refers to the way to make these policies work according to the behaviors designed by policy makers and their expectations.

6。 traffic

Liquidity is due to its role in the financial system, and resources can flow more fully. The benefits of sufficient funds to economic operation are obvious. It enables idle resources to be put into use, and the flow of resources can be used more effectively under the condition of low efficiency. The financial system with liquidity has two meanings, which will be fixed, assets with poor liquidity will be realized as liquid assets, and liquid assets will be transferred between investors with different abilities. How do you measure the liquidity of the financial system? First of all, when all effective supply, demand-side capital flow and all effective demand are met, whether there are idle funds, whether there are unsatisfied capital needs, money supply and capital demand, the best balance can be achieved. The marginal value of resources realizes the optimal and equal allocation of resources in various uses.

7。 Pricing ability

Market economy follows the principle of equivalent exchange, and transactions are no exception to financial markets. In financial transactions, pricing should not only consider the intrinsic value of financial products, but also consider their risk value. In the financial market, the price of financial products can form an open bidding. In this bidding process, the financial market can quickly balance the relationship between supply and demand of financial products and form a unified market price. On this basis, the financial market can effectively guide the gradual accumulation of financial resources and adjust the stock resources. Therefore, a financial system with accurate pricing of financial assets is the premise of resource allocation and risk digestion.

8。 Innovation capacity

Under the specific economic environment and financial system, can they exist independently of the economic environment of the financial system? Due to the deepening of social division of labor, it is becoming more and more complicated to further strengthen international economic ties in the modern economic environment, with more and more applications of technical means and knowledge in economic development and more and more market transactions. Accordingly, more and more complex risks are hidden in the modern economy. So it plays a decisive role in the economy, and the financial system must be able to change the changes in the economic environment. Only in this way can it correctly exercise its functions to meet the requirements of economic development. The financial system in the environment of innovation and economic change is interactive. The rigid financial system will only hinder the economic operation, thus restricting the further development of the economy.

9。 information capacity

The financial system that transmits information is particularly important, precisely because the functions played by the financial system are truly connected in the market. Compared with independent supervision, the monitoring alliance with lower cost sends representatives to enterprises to participate in the management agency of individual investors. This alliance can be a financial intermediary or a financial market. Financial intermediaries have comparative advantages in supervising enterprises and in information and summary in financial markets. An important feature of the financial market, especially the stock market, is the timely and rapid dissemination of information. The trading price of the stock market changes rapidly and is open to the public. As an effective market, the stock price contains a large number of companies. Therefore, information disclosure and market information dissemination in the stock market are the fastest and most complete. However, the stock market information may be incomplete, so there are arbitrage opportunities. Through securities trading, investors obtain company information through public channels, and the information before profiting from it is widely spread.

Edit this paragraph to complete the financial system of banks and securities markets.

The influencing factors of financial system, transaction cost and information asymmetry all play a very important role. These two factors are involved in several major financial systems. Transaction cost refers to the time and money spent on financial transactions, which is the main factor affecting the functional efficiency of the financial system. For individuals, the transaction cost of loans is very high. In order to protect their own funds, loans need to investigate the project, examine the borrower's credit level, and hire professional legal personnel to design a complete loan contract. The existence of high transaction costs becomes the borrowing of funds, and both borrowers and borrowers are blocked. Banks and other financial institutions have great advantages in solving this problem. They have economies of scale, so they can reduce transaction costs. Financial intermediaries collect funds from individuals and enterprises and then lend them out. Due to the economic scale, financial intermediaries can reduce transaction costs. Asymmetric information before the transaction will lead to adverse selection problems and moral hazard problems after the transaction is completed. If we want to minimize the adverse selection problem, we need to determine the lender's non-performing loan risk in the loan market. The existence of moral hazard reduces the possibility of reducing the expected return on loan repayment, thus reducing their desire to provide loans. Problems between shareholders and managers. Shareholders expect the company to maximize profits, thus increasing the owner's rights and interests. In fact, managers' goals often deviate from shareholders' goals. Many, and scattered, because of the large number of shareholders in the company, managers can't effectively supervise managers to master private information, and shareholders can't avoid concealing management information and implementing favorable and unfavorable shareholder behaviors. Financial intermediaries also show their own advantages in solving moral hazard and adverse selection of information asymmetry. Therefore, to a certain extent, credit risk can be identified by the information experts produced by the company. Obtain funds from financial institutions such as deposit banks and lend them to good companies, thus ensuring the bank's income. Loans, bank depositors' representatives supervise the project. Once a bank has signed a long-term loan contract, the cost of supervision between enterprises is higher than that of direct supervision of enterprises. The role of financial intermediaries is "agent supervision". The principal-agent problem between debtors and creditors can be solved to some extent. Of course, banks can't completely solve the problem of information asymmetry. Compared with depositors, banks have the greatest advantage in mastering information, and borrowers have their own situation and the nature of related projects. The bad assets of banks often face the problems of moral hazard and adverse selection, which illustrates this point. The institutional arrangement and mechanism of the stock market, especially the stock market, reduce the agency cost and partially overcome the moral hazard and adverse selection in the allocation of funds. In addition, the development of the stock market is also conducive to the control of the company. The company's performance is combined with the stock market and the salary of managers and owners, and effective managers are linked to the interests of owners. At the same time, liquid financial assets, transaction costs and uncertainties will be reduced. Some high-return projects need long-term capital investment, but depositors cannot gamble their savings for a long-term investment. Therefore, if the financial system can make long-term investment without increasing liquidity, then long-term projects are underinvested. It can be seen that the main difference between bank financing and capital market financing is to solve the moral hazard caused by transaction cost, information asymmetry and adverse selection. Under the conditions of surpassing the market advantages of securities, reducing transaction costs and solving information asymmetry, banks are also very strong, which is the principal-agent problem in the securities market. This also explains why people once thought that the financial system dominated by banks was more conducive to economic development and the financial system was marketized. However, in the past 20 years, countries with market-oriented systems, especially the United States, have sustained economic growth, while the national competitiveness of their bank-oriented systems has been significantly weakened. Moreover, the bank-led country is the trend of developing market mechanism and market-oriented system integration. Through technological progress, its role can not be ignored.

The influence of editing this paragraph on the scientific and technological progress of financial system

(1) Changes brought about by technological progress. Since 1970s, asset securitization, international financial market and online trading have been the most important changes. The progress of computer technology is an important material basis for these changes. 1。 Asset securitization. Securitization of illiquid financial assets is a circulating capital market tool. Computer records show that financial institutions can connect various forms of debt interest and principal, set them up and sell them to third parties. Securitization began in the 1970s, and now two-thirds of fixed mortgage securities. For example, in the mid-1980s, the issuance of auto loans and auto loan securities in 1985 was only $9 billion, which increased from 1986 to 10 billion. Computer technology also enables financial institutions to collect securities and mortgage debts for special market needs, which is an example. The collection of computer mortgage debt can be divided into several stages. At every level, it depends on the degree of risk of different returns. The key of computer technology is online trading. Through the Internet, online trading can enable a large number of stocks and other securities to be traded. Greatly save transaction costs. This also breaks the restriction that you can immediately participate in the transaction in the geographical location. Network security problems still exist, but the securities market and other types of e-commerce online transactions are considered to have broad development prospects. 3。 Important computers and advanced electronic communication technologies or international forces in financial markets. Advances in technology enable traders to take advantage of the world's stock prices and real-time information. Traders can't sell the limitation of turnover time, and it is easier to exchange foreign capital at low cost internationally. The electronic securities market began at 197 1, and the automatic quotation system of American Securities Dealers Association, Nasdaq, became the first electronic securities market in the world. In Europe, the stock market rose from 65438 to 0986. Britain has established the latest stock exchange automatic quotation system, with computers connected to satellite lines in new york and Tokyo, and global securities trading is conducted 24 hours a day. (b) Technological progress in the financial system. The above-mentioned financial system has also undergone corresponding changes, including: the bond market is huge, and more and more debt instruments have begun to circulate. The progress of information technology has reduced the information asymmetry in the financial market and reduced the problems of adverse selection and moral hazard. Assets that used to be on the balance sheet of financial institutions can now be split and repackaged through the risks of trade and financial institutions, and the transaction cost is also reduced. Reduce the transaction cost of these debts and increase supply to enhance their liquidity. Therefore, the development of the debt market. This kind of debt exists not only in the form of bank loans, but also as a financial product traded in emerging securities markets, such as CMO bonds. With the development of derivative products market, the transaction cost of enterprises reduces the market risk. Derivatives Market In the 1970s and 1980s, the OTC derivatives market developed rapidly. They should appear in the demand of both supply and demand sides. Macroeconomic instability, in the 1970s, related exchange rates and interest rates were stable, which required better management of systemic risks to improve enterprises. On the supply side, the development of financial theory enables financial institutions to reduce the cost of these markets, especially in financial engineering, capital pricing and risk management. The development of payment system and electronic system will reduce the demand for family wealth investment bank deposits. In the past, a large number of retail payments were made. In recent years, the application of electronic payment technology has been rapidly popularized. Automatic teller machine (ATM) is an expanding application. This technology appeared in the 1970s. During 1988- 1998, the number of ATMs doubled and the transaction volume tripled. At the same time, the application of credit cards and debit cards developed rapidly in the 1990s. The impact of technological progress on the financial system is to solve the problems of transaction cost and information asymmetry. The impact of transaction costs is that the emergence of computers and cheap data transmission greatly reduce transaction costs. By increasing the number of transactions of financial institutions and providing new products and services, the financial system will become more efficient at lower cost. Computer and communication technology can be collectively referred to as IT. This has a far-reaching impact on the information symmetry of financial markets. Investors can more easily identify the risks of non-performing loans or supervise enterprises, thus reducing the problems of adverse selection and moral hazard. The result is to lower trade barriers and issue tradable securities to encourage release. Compared with banks, the defects in the securities market will inevitably lead to less dependence on banks and the importance of banks in the financial system will be weakened. At the same time, solving the above two problems has made up for the advantages of liquidity to a great extent and played an important role, and its importance has become increasingly prominent. Therefore, the integration trend of the banking-based financial system is market-oriented.

Edit the financial institutions in China under the framework of this paragraph.

The status and functions of financial institutions in China are as follows: Central Bank. The People's Bank of China, the central bank of China, was established in June 1 948+February1. Under the leadership of the CPC Central Committee, the State Council formulated and implemented monetary policies to prevent and resolve financial risks, maintain financial stability, provide financial services, strengthen foreign exchange management, and support local economic development.