| Money has been playing an important role in modern economy, and the monetary policy is one of the main policies adjust the macro-economy. Since the opening and reforms in china, the financial system has been changed greatly. If we cannot figure out the changing mechanism of base money movement, the monetary policy will hardly play the key role.In modern economics, the prevailing monetary theory mainly refers to the monetary theories of prevailing keynesianism and monetarism. These theories were established upon the monetary exogeneity. So-called "monetary exogeneity" means that the money supply is an exogenous variable in economic operation, which is determined by central bank solely. At present, monetary endogenous theories have become leading theories in china and guide base money strategy. But in China, the process of money supply characterized by the "inverted mechanism" clearly shows that money supply tends to be endogenously determined. Therefore, an exploration of the endogenous of base money supply is of great importance to supervise Chinese base money management.During the period of reform and opening up to the world, china broke the ice of traditional planned economy and began to introduce the market economy. The financial system went through progressive but dramatic reforms. The establishment of the central banking system laid down a sound basis for the implementation and operation of the monetary policy. Since 1990s, the direct control has been reduced step by step while the indirect control was strengthened. The monetary policy and the macro-financial control are moving from direct into indirect instruments. The intermediate target moved from credit ceiling into monetary supply, and the operational target moved from credit ceiling to base money. With the introduction and development of the indirect instruments such as the reserve requirements, interest rates, rediscount window and open market operations, the credit ceilingshave been removed in 1998. The commercial banks have gradually implemented asset-liability ratio management and risk management mechanism, which enhanced their internal control system. The implementation of monetary policies relies on the smooth operation of market mechanism. However, the indirect adjustment mechanism has not been fully in place.In the transition from direct to indirect macro-adjustment, we need to formulate the money supply strategy, to control money supply, to implement the strategy of base money and to utilize the various instruments of monetary policy. It is obvious that such object could not be accomplishment if they are made without the history of regulation mode or without observation and analysis of the operation mechanism of base money in china over the last two decades. Based on monetary theory and policies, the paper attempts to review, analyze and forecast the strategy of base money in china. The article is made up of three parts as follows:Part 1 was a summary on Chinese base money macro-adjustment in past years. Firstly, author analyzed the advantages and disadvantages of direct regulation based on evidence. Secondly, the paper gave some analyses of indirect regulation on the basis of three major instruments of monetary policy. The motivation of such conclusion was to point out that Chinese indirect regulation couldn't control money supply effectively at present.Part 2 of the dissertation is about the operation mechanism of base money. Try to reveal endogenous of money supply from various input channel of base money. A good understanding of endogenous can help conduct later suggestions. The author's invention lies in his special angle. This part laid a sound foundation for further analyses.In part 3,we introduced two problems in Chinese base money strategy at the beginning. Then we study the controllability of base money. By analyzing the balance sheet of monetary authorities; we find it is really true that the central bank has the ability to adjust the variation of reserve money. Then, further analysis shows that there exists... |
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