A Comparative Study Of Chinese And American Money Supply

Based on the review of the classical theory of money supply, comparative analysis ofboth China and the U.S. monetary policy and the money supply.Monetary policy, bycomparing the two central banks, the ultimate goal of monetary policy, monetary policyintermediate target of monetary policy objectives and tools of monetary policy operationsand found that the independent status of the People’s Bank of China is lower than theFederal Reserve; ultimate goal of China ’s monetary policy is " promote stable and rapideconomic growth, to maintain currency stability," the ultimate goal of U.S. monetarypolicy is " stable market capitalization and full employment "; intermediate target ofmonetary policy is often used in China is quantified, and the U.S. is often used is theprice of; between monetary policy operatives Chinese commercial banks have used theexcess reserve ratio and bank lending rates, while the United States uses a variety ofprovisions, such as total reserves, non-borrowed reserves and borrowed reserves;currency used in China policy tools heavy administrative color, while the United Statesused a more market-oriented; effectiveness of China’s monetary policy is less than theUnited States.Money supply, through statistical comparison of the two M2and its ratio to GDP, foundthat China’s M2greater than U.S.; value of China M2/GDP and growth rate are muchhigher than the United States, but its stability is lower than the United States. The mainreason for this difference are: the efficient use of funds is lower than the U.S.; demanddeposits accounted for China than in the U.S.; China’s savings rate is much higher thanthe United States; Chinese enterprises to indirect financing, and corporate Americadirect financing based; China because of foreign exchange into the passive base moneyand so on.Finally, over the intermediate target of monetary policy oriented towards market: removeadministrative color monetary policy instruments; continuously improve the efficiency of monetary policy; constantly deepen economic structural reform, and constantly improvethe level of financial development; improving the social security system, changingconsumption habits of residents; improve World status RMB policy recommendations.