Analysing the Relationship between Financial Innovation and Financial Stability

Over the past few years, China's financial market has experienced multiple changes, in particular, the rapid development of financial innovations, including adjustments to shadow banking regulatory policies and new types of wealth management products, which have gradually attracted the attention of academics and regulators, and the rise of Internet finance, which has provided new platforms for capital flows, but has also brought regulatory and risk management challenges. The implementation of the Guiding Opinions on Regulating the Asset Management Business of Financial Institutions (hereinafter referred to as the “Provisions” or the “New Asset Management Rules”) aims to regulate the order of the financial market, and it is of great significance to safeguard China's financial stability. By analysing these topics, this paper explores the relationship between financial innovation and financial stability in China in the process of financial development and provides insights into the study of the changing market environment and financial risks.