of clearly - defined and fully monetized cost structure hampered the adjustment of savings ratio. it is therefore important to expedite the reform of the public sector and the transformation of the government functions. v. observations on low household saving ratio in the u. s. the u. s. household savings ratio in recent years went through two phases : before the mid1990s, it ranged between 7 - 10 % ; after 1997, it declined remarkably with pronounced “ twin deficits ”, especially trade deficit. some attributed the low savings to the so - called “ euphoria ” on the u. s. economic performance since the mid - 1990s. specifically, in late 1980s and early 1990s, after the collapse of the central planning system of the former soviet union and eastern europe, growth in those regions steadily slipped. in the 1990s, the japanese economy was also trapped in prolonged stagnation, and eu ’ s economic performance was lackluster due to structural problems including rigid labor market. the u. s., as the largest economy, boasted the optimal economic system that was seemingly unparalleled in the world. the only remaining challenge, in terms of economic system, came from asia ; after 1997, the asian economies suffered heavy blows. in contrast, the us economy demonstrated strong flexibility and resilience, and recovered rapidly from the 9 / 11 attack and the burst of it bubble in recent years. all these augmented the euphoria sentiment in the market, which in turn influenced the saving behavior of the u. s. residents. however, the unprecedented magnitude of the current financial crisis is expected to dramatically dampen such euphoria sentiments. the time series show that this round of low savings and high consumption in the us commenced in mid - 1990s. in contrast, the savings ratio of east asian countries only surged after the asian financial crisis and china's savings ratios did not begin to increase until 2002. the difference in time distribution indicates that there is no significant causal relationship between the two. vi. options for adjusting saving ratio global savings imbalance exists for many reasons. it seems inappropriate to link savings ratio only to exchange rate, and it is also unrealistic to resolve long - term issues in the short run. one should, instead, adopt a broader and more comprehensive mindset in examining the imbalance of savings. first, a comprehensive set of prescription is needed. although the u. s. can ’ t sustain the growth pattern of high consumption and low savings

even recklessly falsified accounts, which undermined the credibility of the financial sector. these problems can be attributed to a number of reasons, yet the principal ones include the failure in implementing capital rules, unsound corporate governance, feeble market control, and negligent oversight and law enforcement. the low cost of violating rules and regulations can only result in further trampling on laws. therefore, regulators must have the courage to fight, to ensure strict enforcement of laws, and to resolutely safeguard the sanctity of laws. for more than two years, the banking and insurance regulators have been 2 / 4 bis central bankers'speeches seriously dealing with institutions accountable for violating laws and regulations, imposing penalties of more than 8, 000 person / times, and confiscating more than rmb6 billion from relevant institutions. a series of stringent regulatory measures have been taken to crack down on falsified asset categorization and accounting fraud, and more than rmb4 trillion of nonperforming loans have been disposed of. sixth, we should be determined to change the distribution of financial assets. at present, china ’ s bank savings deposits amount to over rmb78. 7 trillion, and asset management products, which are essentially similar to bank deposits, total more than rmb60 trillion. in addition, we have an equally considerable sum of corporate deposits and enormous idle funds in the society. how to transform such funds into long - term stable sources of investment capital through institutional investors, is an important yet urgent issue that must be addressed. we should vigorously develop various institutional investors including publicly offered funds, privately offered funds, insurers, trusts, and wealth management companies. in this way, we can change the investor composition dominated by retail investors and foster a market atmosphere favorable to long - term investment and value investing, while raising the scale of stable funds in the market as well as the efficiency of investment conversion. in terms of pension funds, we can draw on the experience of other countries to construct three pillars, namely basic social security funds, enterprise annuities, and commercial insurance, in a bid to raise the scale of china ’ s pension funds in the capital market to the world average. seventh, we must firmly prevent the resurgence of structurally complex products. china boasts the largest new capital inputs among all economies in the world, but it is a challenging task to raise the efficiency of fund utilization. the key is to avoid the diversion of investment out of