The Study On Endogenous Money Supply In China

This article utilizes the viewpoint of the dialectical materialism of Marxism, and couples with the methods of logical proof and positive analysis. It starts with the analysis of the year 1998 when the deflation occurred most seriously, the monetary policies were brought out most frequently and the effect of the policies were barely satisfactory, and bases the analysis on endogenous money supply, which stems from the realistic contradiction of the strength and the effect of monetary policies. Then the article uses the theory of endogenous money supply in western countries, couples with the historical background of deflation in China, puts forward the theoretical characteristic of China's endogenous money supply, meanwhile makes a positive study on this characteristic, predicts its developing tendency forwardly and broadly, discusses its compact on the efficiency of China's monetary policies, and finally gives some strategic suggestions to improve the efficiency. Based on the endogenous money supply, this article analyses the inefficiency of China's monetary policies during the period of deflation. From this article we can not only acquire more knowledge about the relationships among the four key roles which have a great effect on China's monetary policies: the central bank, commercial banks, residents and enterprises, but also find out the shortcomings of the existing monetary policies. I hope that China's monetary policies and its orientation in the time of economic transition will be recognized from a newer, further and broader perspective.This article consists of six parts. The introduction tries to analyze the current situation of China's monetary policy by using the theory of endogenous money supply from a new perspective. As there is not so much similar analysis at present, I wish to have a try in this area.The first part of the article mainly explains the foundation of exogenous and endogenous money supply theories, and points out the divergence of the two theories in money demand and money creation and the main drawbacks of exogenous money supply, finally makes a simple comparison between the two kinds of theories in money supply.Based on China's national conditions, the second part analyses the characteristic of endogenous money supply in China and makes a positive study on it from the 3 aspects of basic money, money multiplier, and money circulation speed. Therefore, this part not only provides new empirical evidence for endogenous money supply, but also lays a theoretical foundation for China's monetary policy.The third part makes some far-sighted analysis on the development trend of China's endogenous money supply. This part discusses the influence on money supply of financial creation, economic globalization diversification of financial institutions and establishment of modern enterprise system respectively, and points out that the endogeneity of China's money supply will be more apparent in future.The fourth part mainly discusses the effect of endogenous money supply to the monetary policies in China. It advanced the "inverted mechanism" which arise from the endogeneity under the circumstance of tight money at the beginning of the economic transition in China, and analyses the gap between the expectation and results of the policies in the time of stimulating domestic demand. The end of the part predicts the difficulty in dealing with a new potential round of inflation in China. Because with the gradual establishment and perfection of modern enterprise system and the improvement of asset-liability management level in the four state-owned banks, the banks may evade the macro-regulation of the central bank in different ways, thus may lower the efficiency of the regulation made by central bank.Based on the systematic analysis of the endogenous money supply in China, the fifth part gives some strategic suggestion on how to improve the efficiency of China's monetary policies. The main content is as follows: this part emphasizes the importance of dealing with the relationship between the ma...