Financial Innovation and Market Fluctuation - Anchoring the Future in Changing Times! School Board Trustee Tianfan Yuan Gives a Speech at FISF 2025 Graduation Ceremony | Heavyweight

Release time：2025-06-24    

On June 22^nd, FISF 2025 Graduation Ceremony was solemnly held at Xianghui Tang, which carries the 120 years’ glory of Fudan University. At the ceremony, Tianfan Yuan, Trustee Board Member of Fudan University, addressed those gathered providing his wishes for 2025 FISF graduates.

Financial Innovation and Market Fluctuation - Anchoring the Future in Changing Times

- A speech at FISF 2025 Graduation Ceremony

Tianfan Yuan, Trustee Board Member of Fudan University

June 22^nd 2025

Distinguished President Xu, Secretary Li, Dean Qian, Professors, Colleagues, and dear graduates:

Good morning!

I feel greatly honored to stand here today, on the stage in Xianghui Hall, to witness another batch of excellent students who are about to set off their new journey.

You have grown in a time full of contradictions and opportunities, when the global financial market is being reshaped repeatedly by technological innovation and geopolitical turbulence, when technological revolution goes hand in hand with geopolitical risks and uncertainties have become the norm. So, I’d like to share with you some of my thoughts upon the topic of “financial innovation and market fluctuation.”

To begin with, we need to figure out what exactly financial innovation is and why we need financial innovation. For this, I’ll refer to the deep insight of Professor Merton Miller, a mentor and a friend of mine at my Alma Mater, The University of Chicago. Professor Miller is a groundbreaking figure in modern finance, whose students have spread all over the world. Not only did he himself win a Nobel Prize in 1992, his two students, Myron Sholes and Eugene Fama, also won a Nobel Prize respectively in 1997 and 2013.

As he explained, “the essence of financial innovation is to transfer risks from groups unable to bear them to people who have the ability and willingness to by designing instruments and mechanisms.” This reminds us that the emergence of derivative markets, asset securitization, and even Bitcoin is essentially a “risk allocation plan” for the society to cope with uncertainty.

Over the past ten years, we have seen how financial innovation redefines our lifestyle and economic mode. Efficiency has been raised while a number of risks have also emerged, such as shadow banking and cryptocurrency foam. Just like the lesson we’ve learned in 2008 financial crisis: if detached from the needs of the real economy, innovation will eventually become a castle in the air. Financial innovation is a double-edged sword that needs to be handled with reverence.

Students, no matter what careers you choose, whether it’s an investment bank, technological finance or policy supervision, please remember: true innovation is not about riding the wave of trend, but solving problems in the real world. For example, weather futures can help farmers hedge against losses from extreme weather conditions, and real estate investment trusts (“REITS”) allows ordinary people to share commercial real estate revenue instead of leaving them to take bubble risks alone. This requires technical sensitivity as well as humanistic care.

The Black Swan event has transformed from an exception to a norm, as we have already seen the pandemic, wars and monetary policy shifts, etc. When traditional models fail, the value of financial practitioners lies not in “accurate prediction,” but rather “calm response.” With market fluctuation as the touchstone, resilience is more important than prediction.

The training that you have taken in Fudan can empower you with a solid theoretical foundation, but in actual practice, a “dynamic thinking” is needed:

50. Multidimensional cognition: understand how politics, psychology and even climate science influence the market;
50. Bottom-line thinking: just as Dalio from Bridgewater Associates said, “design a system that cannot be broken:”
50. Long-termism: fluctuation will punish any speculator and reward those patiently cultivating value through deep commitment.

Today’s Chinese financial market is facing the issue of seeking balance between two-way opening-up and risk prevention and control. The internationalization of RMB, the registration system of the STAR Market, and “the Belt and Road” financing, are all great opportunities while potentially containing challenges of cross-border capital flows at the same time.

As internationalized talents nurtured by Fudan, you enjoy a unique advantage, able to have “cross-culture dialogues.” No matter where you are, in Lujiazui or Wall Street, please maintain an acute insight into the deep logic of Chinese market and participate in the formulation of global rules with an open mind - as the future of finance belongs to practitioners who stick to “harmony but not sameness.” You need to find balance amid the tension between China and the world.

Dear graduates, as the essence of finance is resource allocation, your mission is to make this allocation more efficient, fair and resilient. However, the market fluctuates, may you always embrace the two qualities:

1.The courage to innovate, daring to reconstruct outdated paradigms;

2.A clear awareness of treading on thin ice, always keeping in mind that risk management is the ultimate responsibility of financial people.

You need to be the “anchor” in financial reforms.

At the time when the international financial school moved into Fudan University Francis and Rose Yuen Campus, I’d like to conclude with Professor Miller’s exhortation. “The financial market is like the ocean, both breeding life and containing hidden storms. So true voyagers should know how to ride winds and waves as well as how to vector directions in storms.”

As President Li Jin pointed out at the commemoration of Fudan’s 120^th anniversary, innovation is the core competitiveness in the future. But innovation never goes alone. It is a dialogue that transcends disciplines and ideas, requiring us to break through the existing frame, embrace multi-dimensional perspectives and gather the courage to question the status quo. Meanwhile, it is also essential for us to explore the unknown and settle social problems with passion and expectation for the future.

After graduating from school, you will set foot on another journey of life, which will be like a river, turbulent at some times and calm at other times. Every one of us will go through a spiritual transformation from excitement to helplessness, from tedium to agitation, from seeking changes to making choices, and eventually to action. This process, full of emotions, thinking and transformations, is a dialogue between the heart and the brain.

I firmly believe that all of you students, having grown out of the fertile soil of Fudan, are fully prepared to make active innovations and life your own brilliant life.

Thank you!