In 2007, the subprime mortgage crisis broke out in the United States. Many government rescue measures failed to contain the spread of the crisis, which gradually evolved into a worldwide financial crisis and affected the real economy of all countries in the world. At present, the economies of major developed countries are generally affected by the financial crisis and their growth is slowing down. I. Formation of Sub-prime Crisis and Financial Crisis The Sub-prime Crisis that broke out in the United States in 2007 (referred to as Sub-prime Crisis) was a series of events with serious crisis colors caused by the turmoil in the US sub-prime market. The crisis spreads risks continuously through the interconnection between financial markets, and then spreads to the whole global financial system, eventually leading to the financial crisis. The mortgage market in the United States can be divided into three levels according to the borrower's credit status: priority mortgage, intermediate mortgage and subprime mortgage. The so-called subprime mortgage refers to the loans provided by lending institutions to borrowers with poor credit and low income. Because these borrowers can't apply for preferential loans, they can only seek loans in the secondary market, but their loan interest rate is usually 2% ~ 3% higher than that of preferential mortgages, and they are required to abide by stricter repayment methods. Due to the poor credit status of subprime mortgage institutions, it is easy to default. In the case of loose credit environment or rising house prices, even if the loan cannot be recovered due to the lender's breach of contract, the loan can be recovered by refinancing or selling the mortgaged property and earning income. However, in the changing credit environment, especially in the case of falling house prices, it is not only difficult to refinance or sell mortgaged properties, but also difficult to recover all loans even if the mortgaged properties with falling prices are sold. When such incidents occur on a large scale, the subprime mortgage crisis will occur. Second, the cause of the crisis. According to the situation of this crisis, the reasons can be summarized as follows: First, the monetary policy of the United States has changed from loose to tight. In 200 1 year, with the collapse of the domestic stock market, the collapse of a large number of internet companies and the impact of the "9. 1 1" terrorist attack, the American economy experienced a large degree of decline. In order to reverse the economic depression and stimulate economic development, the American government adopted a low interest rate monetary policy and vigorously developed credit business, which made the real estate industry enter a good development cycle. From the beginning of 2006 to June of 2003, the Federal Reserve lowered the interest rate by 13 times, which reduced the federal funds rate from 6% to 1%, the lowest point in 46 years. The loose monetary policy environment makes the interest rate of housing loans continue to decline, and people's enthusiasm for buying houses continues to increase. However, some banks and financial institutions have lowered the credit threshold of loans, and the down payment rate of housing loans has decreased year by year, from 20% of the historical standard to zero, and even negative down payment has appeared, which has greatly reduced the pressure on buyers and led to the prosperity of the mortgage market for many years. However, since June 2004, in order to curb inflation, the Fed's low interest rate policy has begun to reverse, and it has started the cycle of 17 consecutive interest rate hikes. By August 2006, the federal funds rate rose from 1% in June 2003 to 5.25%. The process of increasing interest rates not only increases the cost of housing loans, but also promotes the rapid decline of housing prices and a large increase in the risk of mortgage default, which has become a fuse of the subprime mortgage crisis. Secondly, the optimistic assessment of the US economic situation has stimulated the expansion of the subprime mortgage market. With the improvement of American economic situation, a large number of mortgage companies pay more attention to the improvement of housing consumption level, and the real estate market has produced a large number of financial innovative products with high risks. These "innovative" financial loans only require buyers to bear a low and flexible monthly repayment amount, which stimulates the improvement of housing ownership rate in the United States. From 199 1 to 2004, the American housing ownership rate rose from 63.9% to 69.2%. The good economic development situation masks the huge risk of subprime mortgage. On the other hand, under the trend of world economic globalization, factors such as falling interest rates, depreciation of the US dollar and rising asset prices around the world have also made subprime products have higher growth space in terms of investment returns, attracting a large number of investors from other countries and regions outside the United States, and hiding the "subprime loan risk" under the cover of the US economy in the world financial system. Third, the secondary products are over-securitized. During the boom of real estate market, with the help of investment banks, many financial institutions securitized a large number of real estate mortgage loans, stripped some mortgage loans from their balance sheets, and issued mortgage-backed securities (MBS) based on these claims. In order to make MBS easy to sell, investment banks also rated and enhanced its credit, and issued mortgage debt bonds (CDOs) based on intermediate MBS, which were packaged layer by layer and sold to the society, and the risks were transferred to investors through mortgage securitization. At the same time, the regulatory authorities also lack supervision over such "derivatives" derived from high-risk basic products, which greatly increases the systemic risk of the whole market. With the reversal of monetary policy, when the loan repayment crisis occurred, the price of mortgage securitization products fell sharply, and a large number of investors, especially investment banks, fell into operational difficulties. Third, the impact of the crisis on the world economy The financial crisis triggered by the "subprime mortgage crisis" swept the global financial market and had a huge impact on the world's major economies. First of all, from the most direct impact, the development of the global financial industry is the biggest victim of this crisis. On the one hand, in developed countries and regions such as Europe and America, many banks and investment funds have directly or indirectly purchased a large number of securities investment products derived from subprime mortgages. When the crisis came, huge losses were inevitable, and a large number of investment banks, investment funds and financial companies closed down or were acquired. When these financial institutions close down or fall into financial crisis, it will definitely increase the systemic risk of financial markets and inhibit their basic functions of financing and resource allocation in economic development. At the same time, the crisis has also increased the risks of many emerging financial markets, which will have a negative impact on their rapid development. Because most of these emerging markets are developed on the basis of learning from and referring to the financial market development experience of developed countries, facing such a financial crisis that started in developed countries will bring huge linkage effects to these emerging markets and make their financial systems more fragile. Second, from the indirect effect, the crisis not only brought hundreds of billions of dollars in huge losses to the world financial development, but also brought new choices to the financial development path. Wall Street has been promoted as a model of "financial liberalization" all over the world, and many countries and regions have been trying to introduce the Wall Street model into the local financial system. Among them, a large number of financial derivatives stimulated by financial innovation are imitated all over the world, which is an obvious proof. The emergence of this financial crisis has forced people to re-examine financial liberalization, excessive securitization of assets and the effectiveness of financial supervision. In the future financial development, how to guard against the risks brought by financial liberalization and how to balance the relationship between liberalization and supervision will be a problem worthy of in-depth study. Third, the financial crisis has also brought shocks to the global real economy, which may lead to a new round of "stagflation". In the years before the crisis, inflation was a common phenomenon all over the world, and an important reason for global inflation was excess liquidity. When the financial crisis happened, the market liquidity suddenly decreased. In response to the credit crisis, the monetary authorities in many countries around the world have adopted the methods of injecting liquidity into the market and cutting interest rates. Although this method can alleviate the crisis, it may further aggravate inflation. With the expansion of the crisis, the development speed of the world economy is bound to slow down, and even a local recession may occur, which may lead to a "stagflation" situation in the global economy. Fourth, US trade imports will shrink and spread to other countries and regions. As the most important product import market in the world, once its economy has problems, it will inevitably reduce its import demand, leading to a sharp drop in the import level of the United States. This situation will slow down the export of other countries and regions, especially those countries and regions that rely on import and export to stimulate economic growth and improve domestic employment. At the same time, in the face of such a serious financial crisis, it is inevitable that the US dollar will continue to depreciate, which will reduce the wealth level of countries with US dollars as their main foreign exchange reserves and cause huge losses to their economies. Four. The Impact of the Crisis on China's Economy As an important force in the development of the world economy, China will also be affected by the crisis. First of all, this crisis will have a huge direct impact on China's exports. On the one hand, due to the depreciation of the US dollar and the continuous appreciation of the RMB, China's export products lack price competitive advantage in the world market, which will inevitably have a negative impact on the development of China's export industry; On the other hand, as an important partner of China's export trade, after the crisis broke out, due to its domestic economic depression, its import demand dropped sharply, which led to the slowdown of China's export trade growth. This influence began to appear in 2007. Since February 2007, Sino-US trade has been declining year by year. Among them, since June 2007+10, the growth rate of exports to the United States has been lower than that of imports. According to past trade experience, if American consumption drops by 1 percentage point, our exports to the United States will drop by 5-6 percentage points; If American consumption drops by 3 percentage points and the economy enters recession, our exports to the United States will drop sharply, which will have a 20%-30% impact on China's exports. Second, the devaluation of the US dollar brought about by the crisis will seriously damage the value and actual purchasing power of the large amount of US dollar foreign exchange reserves held by China. Since the outbreak of the crisis, the US government has accelerated the process of dollar depreciation in order to alleviate the deterioration of the domestic economic situation and pass on the risk that the domestic economy will fall into recession. From the reform of RMB exchange rate in July 2005 to the end of 10 in 2008, the exchange rate of RMB against the US dollar rose from 8. 1 1: 1 to 6.84: 1. Due to the large trade surplus in recent years, China has accumulated a large amount of foreign exchange reserves. As of September 2008, China's foreign exchange reserves exceeded US$ 65,438+US$ 0.9 trillion, making it the largest foreign exchange reserve country in the world. The arrival of this crisis, on the one hand, made the dollar assets held by China depreciate rapidly, on the other hand, made the actual purchasing power of China's large foreign exchange reserves gradually decrease due to the continuous depreciation of the dollar. Third, the crisis has changed investors' risk preference and intensified the volatility of short-term international capital flows. With the increasing uncertainty and risk of global economic operation, the economic development of developed countries has slowed down, the US dollar has continued to depreciate, the expectation of RMB appreciation has increased, and a large amount of international capital has flowed into China, which not only increases the difficulty of managing speculative capital and liquidity, but also further increases the pressure of RMB appreciation. Fourthly, the crisis will bring some opportunities and negative effects to China. On the one hand, in the crisis, our government can really examine the competitiveness and potential of some industries and promote the structural adjustment of domestic industries. At the same time, it will also accumulate experience in coping with the crisis and train and exercise a number of industries and enterprises with strong anti-risk ability. On the other hand, in this crisis, European and American financial markets have been hit hard. This external environment is conducive to China financial institutions to bypass certain thresholds and barriers, expand their financial investment in the world at a relatively low cost through acquisitions, mergers and capital injections, and accelerate the internationalization process. At the same time, the continued depreciation of the US dollar and the appreciation of the RMB will also help to improve the status of the RMB in the international monetary system. (The author is the executive vice president, professor of finance and doctoral supervisor of School of Economics, Shandong University)

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