We must have a correct assessment and a clear understanding of the security and vulnerability of our own financial system. In the background of that the domestic industrial transformation has not been successful, the economic structural contradictions are prominent, the financial asset pricing mechanism is not sound, the financial supervision system is immature, and the asset bubble is still severe, rushing and blindly advancing the internationalization of the RMB, allowing the domestic currency to fall unilaterally, and sitting idly by the shrinking of foreign exchange reserves will lead to a large probability of risk events. On December 14, General Secretary Xi Jinping proposed to attach great importance to financial risks in his speech, as well as to hold the bottom line of preventing systemic financial risks. This reflects the central government's attention and concern to financial work and the reform of the RMB exchange rate formation mechanism, pointing put the path and direction of this major reform. In terms of actual actions, the Central Bank and SAFE have launched a series of substantive actions to stabilize investor confidence, and intensify the supervision of cross-border capital flows and transactions of domestic and foreign entities. While ensuring the normal and rational international balance of payment, the authenticity of overseas investment is strictly investigated, and illegal income and expenditure behaviors are severely cracked down, so as to further stabilize and balance the supply and demand of foreign exchange. At the same time, we should strengthen communication with the market and enhance expectation management.
