How Fiscal Policy Affects Money Creation:Passive Effects and Active Control
The requirement to"improve the monetary supply control mechanism"necessitates a thorough analysis of different channels affecting money creation and supply,fully leveraging the regulatory roles of each channel.Through studying the dual characteristics of the fiscal department's"passive participation"and"active influence"in money cre-ation in China,it is found that:First,in the practical work of fiscal finance in China,the established system of centralized treasury collection and payment and the institutional arrangements for the fiscal department to fulfill the responsibilities of the state-owned financial capital contributor grant the fiscal department the substantial ability to influence money cre-ation.Second,the"concentrated"and"isolated"functions of the centralized treasury collection and payment system de-termine that the fiscal department can extract or inject a substantial amount of money into the currency circulation mar-ket through channels such as fiscal revenue,fiscal expenditure,and government debt.This,in turn,causes contraction or expansion in commercial bank credit through the effect of money circulation.However,because the fiscal department in China lacks the legal basis to influence money creation channels under the centralized treasury collection and payment system through controlling budget execution,the fiscal department can only passively affect money creation through this system.Third,the institutional arrangements for the fiscal department to fulfill the responsibilities of the state-owned fi-nancial capital contributor regulate the ability and direction of money creation by state-owned commercial banks.As such,the fiscal department can actively guide and constrain state-owned commercial banks to influence their credit scale and structure.
Public FinanceMoney CreationState-owned Financial Capital
万方数据
维普
