The Changes,Problems and Suggestions of the Base Money Supply Mechanism in China—Also on the Policy Intention of the People's Bank of China to Purchase Treasury Bond
Recently,market discussions on the People's Bank of China's purchase and sale of treasury bonds in the secondary market have gradually increased.The core policy intent of the People's Bank of China's purchases of treasury bonds is to base money supply,not quantitative easing.Since 1984,when the People's Bank of China specialized in central bank functions,the mechanism of base money supply has undergone important changes.The article makes a comprehensive review of the base money supply mechanism and analyzes the advantages and disadvantages of various supply chan-nels.At present,the base currency supply mechanism is about to change.On the one hand,the foreign exchange account has stopped growing,and the space for downgrading is more and more limited.On the other hand,there are deficiencies in both traditional and new monetary policy tools.In terms of policy recommendations,firstly,the purchase of treasury bonds should be used as the main channel for base money supply in the future;sec-ondly,the purchase of treasury bonds should be independent and regulated;thirdly,various base money supply channels should be used rationally;and fourthly,the increase of gold holdings can be used as a supplement to the base money supply channels.
base moneymoney supplyfunds outstanding for foreign exchangereserve requirementmedium-term lending facility