On The Orientation Of The Central Bank In Financial Ecosystem

There are the so-called Keystone species that process the significant roles for healthy and stability of the whole eco-systems. The author found that the central bank plays the similar role in the financial eco-systems by its direct supply for money, the food for most of biological populations in this system, and the guarantee to the formal performance of funds chain of it, even without any ability to direct control to other species in financial eco-systems.In response to this interesting finding, this paper presents such a proposition: whether the central bank is the Keystone in the financial eco-systems or not? And there are the further questions we have:(1) what ’financial ecosystems’ stands for? Is there any theory involved of the metaphor between the financial system and eco-system? And what kinds of assumptions are necessary to this task? (2) What kind of performance for the central bank in financial eco-systems? Is that Keystone one? What kind of relationship between it and other species in this system and how they coordinate to each other? (3) How to access the role of our central bank for Chinese eco-systems during the period of transition of economic-systems? Those are the main problem to be solved in this dissertation.By the analyses of positive and normative economics, our researches are mainly about the systematic studies on the roles of the central bank within the financial eco-system. And the main contents are as follows:Chapter One:Introduction. In which we illustrate the background and intention of our studies. We already found the significance of central bank during the further analyses to structures and functions of financial eco-systems just as what the Keystone performed in ecological systems. Therefore, the main proposition shows whether the central bank is the Keystone for financial eco-systems or not? To prove this, we organize this chapter as follows:illustration, analyses and solution to the given problem, plus we provided the brief introduction to each part. There is the instruction part to major methods applied in the dissertation and related conclusions in the end. Chapter Two:The theoretical framework for financial eco-systems. Based on the related literatures involved of financial eco-systems form all over the world, we draw four assumptions for financial system simulating to ecological systems. Furthermore, from the viewpoint of bionics, we provide the definition, intension, characters, compositions, structures and the theoretical framework of metabolism and balance within financial eco-systems by applying the contents and related theories in ecological systems. Specifically, we stress that the evolution of financial eco-systems is the complex evolutionary process in which financial agents and their environments, time and space, elements of matter and conditions of environments are acting to each other.Chapter Three:Monetary Circulation of Financial Eco-systems. Here, we define the monetary circulation in financial systems as follows:in SectionⅠ, we introduce the definition, characters and presenting methods for matter circulation. SectionⅡis mainly about the related research of demand and supply in existed monetary theories. SectionⅢprovides us a survey for money circulation including three main different theories for money circulation speed. In SectionⅣ, we focus on the discussion to the contents and related researches of money circulation in financial eco-systems, and explain money supply is both of endogenous and of exogenous according to the money circulation theories.Chapter Four:The Relationship between Central Bank and Financial Eco-systems. From the viewpoint of money circulation theories, we define the relationship between central bank and financial eco-systems such as:First, we analyze the pathway of evolution for central bank within the financial eco-systems based on the money circulation theories. Secondly, we well proved that central bank is the Keystone spice for financial eco-systems according to the principle of Keystone. Third, we discuss the relationship between central bank and other spices in money circulation. Forth, based on evolution theories, we illustrate the complicated interactions central bank and its financial ecological environments.Chapter Five:Central Bank is the Main Valve to money circulation. There are two major aspects to prove the central bank as the main valve to money circulation such as currency issuance and payment & settlement. There are five detail aspects for this problem:(1) We illustrate that the integrated issuance of currency is the central power to driving the evolution of central bank in financial eco-systems. (2) We introduce the contents, categories, channels and procedures of currency issuance, and its reserve institutions. (3) We induce the changing trends for currency issuance institutions in the range. (4) There is the brief presentation to changing history of currency issuance of Chinese central banks. (5) We make the further discussions on intensions principles, main contents for the action to money circulation making by central bank, and Chinese specific case analysis.Chapter Six:Central Bank as Money Circulation Remoter. From the viewpoint of supply pathway for money circulation, we discussed the role of central bank as money circulation ’remoter’, which is the prime role for central bank. Specifically, we organize this chapter as follows:(1) We illustrate the intension, main contents and working principles of money circulation remoter. (2) Based on the viewpoint of financial eco-systems, we argue the efficiency money circulation controlled by central bank, and its main elements. (3) From the viewpoint of space, we provide a survey for various institutional changing pathway of money circulation controlled by central bank. (4) We test the effect of money circulation controlled by Chinese central bank positive methods. (5) There are some policy advices to enhance the efficiency of central bank’s monetary control.Chapter Seven:Central Bank as the Ballast to Money Circulation. From the viewpoint of demand pathway for money circulation, we discuss the role of central bank as ballast to money circulation. In SectionⅠ, we provide the definition, intension, changing pathway and working principles of ballast to money circulation. SectionⅡprovides us the main content actions of central bank as ballast to money circulation. In SectionⅢ, we illustrate institutional framework cases that central bank is in charge of the stability to money circulation from developed countries and transitional countries respectively. In SectionⅣ, we introduce the changing pathway of ballast role for Chinese central bank, and test its efficiency by positive methods. Finally, we provide some policy advices to enhance the ballast role of central bank’s money circulation control.Chapter Eight:The main thesis of this chapter is to draw a brief summary of the work and conclusions about the paper. Furthermore, prospects on the direction of future research in conjunction with the current financial crisis.There are the innovative points in this dissertation such as:Firstly, we provide a bright new viewpoint for researches on financial performance and financial risk management by the introduction of Financial Eco-systems. Based on related studies, we provide a division to the evolution of financial eco-systems theory including financial development theory, financial resources theory, financial coordination theory and financial eco-systems theory, and furthermore, illustrate four fundamental assumptions for financial eco-systems. We point out that the origin of vulnerability of financial eco-systems is from strong interactions, artificial character among those elements, and the vulnerability of money & credit caused by the characters such as multi-direction, reversibility, diffusion in the procedure of matter exchange and energy flows.The second, Money circulation is the central function of financial eco-systems, and its main characters different from the matter circulation are as follows:(1) Bi-direction. Since money circulation includes the processes both from producer to decomposer through consumer, and from decomposer to producer through consumer, there is an issue for endogenous and exogenous in monetary theories. (2) Adjustability. From the viewpoint of supply pathway in money circulation, central bank could conduct the reasonable control on the matter exchange between consumer and him to realize the healthy well-ordered development of financial eco-systems. (3) Adaptation. From the viewpoint of demand pathway in money circulation, the inner and external environmental changes of financial eco-systems could change the exchange amount between decomposer and consumer, which forces central bank to create money passively for the stability of financial eco-systems. Therefore, from the viewpoint of money circulation, we think that money is both endogenous and exogenous. Thirdly, Central bank originates from the evolutionary process of money circulation and credit flows in financial eco-systems, which has three main functions for the system:(1) The main valve to money circulation for financial eco-systems. (2) Money circulation remoter for financial eco-systems. (3) The ballast to money circulation for financial eco-systems. Based on these functions, central bank is the fatal element to financial eco-systems, which will affect its structures and functions, and seriously influence the behaviors from other species such as governments, commercial bank, corporations and residents as well. Central bank is the Keystone for financial eco-systems, as our thoughts.Fourthly, as the main valve to money circulation, central bank has two major roles:(1) Provide food to other species (currency issuance). (2) provide the facility (payment & settlement) for money circulation between consumers (populations of financial institutions). On one hand, as the producer of money circulation in financial eco-systems, one of central bank’s main tasks is currency issuance, which provides the matter foundation for its "remoter’and’ballast’functions. On the other hand, according to the non-profitability and special monopoly position in currency issuance, central bank will never face the credit risk and liquidity risk, and at the same time, central bank holds the legal reserve for commercial banks, which facilitate the settlement between financial institutions.Fifthly, from the supply pathway of money circulation, there are two ways for central bank to play its role as the remoter:money and credit transmissions. They are symbiotic, inter-dependent and indivisibly evolving overtime for the development of financial eco-systems evolution. We have the conclusions as follows:(1) there are two judging standards for the efficiency of money circulation controlled by central bank:(a) whether it is efficient in the long term or not? (b) Whether central bank could control the money circulation into the balance state? (2) During the short term, central bank could make the efficient control to money circulation in financial eco-systems, but in the long term, it would not work. (3) Based on the positive analysis, there is the efficient result for Chinese money governance in the short term by both credit and money pathways that interact to each other. But in the long term, it does not work well.Sixthly, from the demand pathway of money circulation, the ballast role of central bank in money circulation is mainly from two aspects:(1) the governance to financial systems and financial market to maintain the normal operation of money circulation in financial eco-systems. (2) As the lender of last resort, central bank is in charge of stability of money circulation in financial eco-systems. We committed the related positive test to the effect as ballast for Chinese central bank. Overall, the stable level was increasing for the past decade, and average index is about 68.0, which presents that Chinese overall financial eco-system is in the normal stage with the low risk for financial crisis, but at the same time, shows Chinese central bank had the increasing trend for its ballast role.However, financial eco-systems is a very complicated problem that includes the knowledge form ecology, bionics, evolutionary economics, finance and econometrics etc. which required rich theoretical experiences and insights. Therefore, there are some unsolved problems as below:(1) we applied the principles from ecology to analyze the financial problem, but it is not perfect yet. (2) There is too much subjective element in the weight setting of our positive analyses. (3) We did not have enough ecological methods to solve financial problems.