What Are the Effects of an Increase in Money Supply?
Money supply (supply of money), also known as money stock, money supply, refers to the sum of the amount of cash and deposits in circulation at a point in time. Money supply is one of the main economic statistics indicators compiled and published by central banks in various countries. At present, China's money supply statistics are based on days. The so-called money amount in a certain month and day is actually the amount at the time of the day when the bank that handles the currency ends its daily operations. On this basis, if the monthly amount of money refers to the average monthly amount, the calculation is more detailed, which can be the average of the daily amount of money throughout the month. Thicker, it can be the average of the two currency stocks at the beginning and end of the month. The same is true of the annual average amount of money. For analysis of some issues, figures such as currency balances at the end of the month, quarter, and year can also be used. The actual level of money supply is the object of a country's monetary policy adjustment. Forecasting the growth and change of money supply is the basis for a country's monetary policy. Due to the different economic and financial developments and realities of different countries, and the different interpretations of currency definitions by economists, the currency supply indicators published by central banks in various countries are also different. There are the narrow money supply (the sum of cash in circulation and the demand deposits of commercial banks) and the broad money supply (the narrow money supply plus the sum of commercial bank time deposits) [1] .
- Generally speaking,
- The central bank generally divides the money supply into different levels according to the needs of macro-monitoring and macro-control, and according to the size of liquidity. China's current monetary statistics system divides the money supply into three levels:
- 1. Cash in circulation (M0) refers to the sum of the unit's cash on hand and the residents' cash on hand, where "unit" refers to enterprises, institutions, groups, troops, schools, etc. outside the banking system.
- 2. Narrow money supply (M1) refers to M0 plus demand deposits paid by the company's bank at the bank.
- 3. The broad money supply (M2) refers to M1 plus the unit's time deposits in the bank, urban and rural residents' individual savings deposits in the bank, and client deposits from securities companies. Among them, since July 2001, the People's Bank of China has included securities company client deposits into the broad money supply M2.
- Divide the level of money supply according to liquidity standards.
- From the definition of money supply, we can see that there are two ways to expand the money supply: one is to increase the base currency, and the other is to increase the money multiplier.
- Admittedly, whether it is lowered
- As China
- Since the reform and opening up in 1978, China's economy has shown a geometric growth and its economic scale has continued to expand. In 2009, it became the world's second largest economy. With the continuous expansion of the economic scale, the market currency circulation has also gradually increased. Especially under the influence of the financial crisis, China launched a 4 trillion investment plan and a plan for the revitalization of ten major industries, which caused China's money supply M2 to grow excessively. As of the end of June 2012, China's broad money supply balance, also That is, we often say that M2 is 92.5 trillion.
- We take China's relatively mature economic situation in 1990 as the base period and compare and analyze the money supply of China and the United States.
- From the founding of the PRC to 1990, China's broad money supply M2 balance was 1.53 trillion; as of the end of June 2012, China's M2 was 92.5 trillion, which has increased by nearly 60 times in just 22 years, equivalent to about 14.5 trillion US dollars. In 1990, the broad money supply in the United States was 3.28 trillion, and as of the end of June 2012, the M2 balance was 9.99 trillion, which was a little more than double. It is found through comparison that in 22 years, China s money supply has grown 46% more than the United States, but the total economic volume is only half that of the United States, indicating that China s money supply is far greater than the needs of the real economy. In nominal terms, China's renminbi is not undervalued, but overvalued. Let's focus on what causes China
- Dongfang Wealth.com has complete and up-to-date information. The above is a link to the website, which can be viewed if necessary, as well as other macro data.
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| April 2014 | 1168800.00 | 0.70% | 324500.00 | -0.98% | 58600.00 | 0.51% |
| March 2014 | 1160700.00 | 2.55% | 327700.00 | 3.51% | 58300.00 | -6.42% |
| February 2014 | 1131800.00 | 0.74% | 316600.00 | 0.54% | 62300.00 | -18.56% |
| January 2014 | 1123500.00 | 1.54% | 314900.00 | -6.64% | 76500.00 | 30.55% |
| December 2013 | 1106500.00 | 2.52% | 337300.00 | 3.85% | 58600.00 | 3.90% |
| November 2013 | 1079300.00 | 0.85% | 324800.00 | 1.69% | 56400.00 | 1.44% |
| October 2013 | 1070200.00 | -0.67% | 319400.00 | 2.27% | 55600.00 | -1.59% |
| September 2013 | 1077400.00 | 1.53% | 312300.00 | -0.57% | 56500.00 | 2.91% |
| August 2013 | 1061200.00 | 0.84% | 314100.00 | 1.13% | 54900.00 | 0.92% |
| July 2013 | 1052400.00 | -0.20% | 310600.00 | -0.96% | 54400.00 | 0.37% |
| June 2013 | 1054500.00 | 1.19% | 313600.00 | 1.10% | 54200.00 | -0.18% |
| May 2013 | 1042100.00 | 0.92% | 310200.00 | 0.85% | 54300.00 | -2.34% |
| April 2013 | 1032600.00 | -0.34% | 307600.00 | -1.16% | 55600.00 | -0.18% |
| March 2013 | 1036100.00 | 3.76% | 311200.00 | 5.10% | 55700.00 | -7.63% |
| February 2013 | 998600.00 | 0.66% | 296100.00 | -4.88% | 60300.00 | -3.52% |
| January 2013 | 992100.00 | 1.84% | 311300.00 | 0.84% | 62500.00 | 14.26% |
| December 2012 | 974200.00 | 3.11% | 308700.00 | 3.97% | 54700.00 | 4.39% |
| November 2012 | 944800.00 | 0.90% | 296900.00 | 1.23% | 52400.00 | 1.75% |
| October 2012 | 936400.00 | -0.77% | 293300.00 | 2.27% | 51500.00 | -3.56% |
| September 2012 | 943700.00 | 2.03% | 286800.00 | 0.39% | 53400.00 | 6.37% |
| August 2012 | 924900.00 | 0.63% | 285700.00 | 4.50% | 50200.00 | 1.01% |
| July 2012 | 919100.00 | -0.64% | 283100.00 | -1.53% | 49700.00 | 0.81% |
| June 2012 | 925000.00 | 2.78% | 287500.00 | 3.19% | 49300.00 | 0.61% |
| May 2012 | 900000.00 | 1.17% | 278600.00 | 1.31% | 49000.00 | -2.39% |
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Money Supply Introduction
- Preliminary statistics released by the central bank on March 10, 2013 show that new loans in February were 620 billion yuan. At the end of February, China's money supply balance reached 99.86 trillion yuan, approaching 100 trillion yuan, ranking first in the world.
- currency
- According to preliminary statistics from the central bank, the scale of social financing in February was 1.07 trillion yuan, 22.8 billion yuan more than the same period in 2012. Among them, RMB loans for the month increased by 620 billion yuan, a year-on-year increase of 90.7 billion yuan, a 42% decrease from the month of January 2013.
Money Supply Reasons
- Bank of Communications chief economist Lian Ping analyzed that the decline in new loans in February was mainly due to the decrease in the actual number of working days in the month and the release of the backlog of projects at the end of last year in January. Cast. New medium- and long-term loans to the public continued to increase, indicating that the economy continued to pick up modestly, corporate profitability expectations have improved, and the current credit demand for the real economy is relatively stable, and credit growth in March will pick up significantly.