The People's Bank of China, the country's central bank, Monday described in a report that the country's financial situation is stable "in general", the risks left over from the past have been dealt with, and a financial stability mechanism is coming into being.

According to its first report on the country's financial stability, the central bank said China needs to pay special attention to 10 major problems facing the country in order to maintain financial stability.

"Financial stability" refers to the situation in which the financial system is capable of playing its key roles effectively, according to the report.

Transforming its economic growth mode was listed as the first of the 10 issues.

China's inefficient use of raw materials and energy in the past decades has been blamed for the country's shortage of key raw materials and energy and rising prices on both domestic and overseas markets.

Citing examples of the financial turmoil that hit Mexico, Thailand, Russia, Brazil in late 20th century, the report said financial stability concerns political, economic and social stability, and China must pay close attention to the existing problems in its financial system to prevent financial risks and push forward financial reform.

Other issues listed by the report include coordinated development of direct and indirect financing, hidden fiscal deficits, control and liberalization of capital prices, improvement of the corporate governance of financial institutions,risk supervision and control of overlapped financial services, andthe impact of economic and financial globalization.

The report said hidden fiscal deficits caused by a lack of funding for social security and debts of local governments may affect financial stability.

As China is in the process of improving its mechanism to form interest rates and exchange rates, both the corporate world and residents should adapt themselves to the changing environment, which is characterized by liberalization, said the report.

The report also called on the corporate world and residents to learn how to recognize and deal with risks involving the interest and exchange rates.

The central bank voiced its concerns over the uncertainty brought by the "overflowing" effectiveness of economic and financial globalization on China's financial stability.

Facing many uncontrollable factors, such as soaring oil prices and interest rate hikes, the depreciation of the US dollar, international disputes and even wars, China's financial stability is coming under growing influence from the international economic and financial environment, noted the report.

Coupled with the benefits from China's growing integration into the world's production, trading and capital system is the increased uncertainty and risks arising from globalization, it said.

China will establish its financial stability index system and early-warning system and improve its monitor and evaluation methods in the vulnerability of its financial system in a bid to set up a rapid-reaction mechanism for financial risks of different kinds and scales.

Aside from its annual report and a report on the implementation of monetary policies, the central bank said it will publish such reports every year.

Source: Xinhua