Construction of Macro and Micro Regulatory System of Carbon Finance in China.

Constructing an appropriate regulatory system is a prerequisite for the development of carbon finance. Recently, the progress made in the field of financial supervision theories, including the demand, the system and the effects have provided valuable guidance for the establishing of regulatory system for carbon finance. From the practical experiences of EU ETS, we can conclude that it is essential to involve the spot and derivative instruments simultaneously to the existing financial regulatory system in the short term before setting up one more suitable mechanism in the future. It is advisable to combine the macro-prudential and micro-prudential regulations, that is, building a macro-prudential regulatory commission with the People's Bank of China as a leader, which takes the responsibility of identifying, monitoring and controlling the systematic risks, at the same time, founding up a specific sector in the People's Bank of China, which accounts for the micro-prudential regulation of carbon finance. [ABSTRACT FROM AUTHOR]