2015/7/8 Fudan International Media news Summer session 2015 .http://www.china.org.cn/business/2015- Chinese financial markets 06/28/content 35926375htm tp:www.chinadailvasia.com/business/2013- Part 1: Central Bank and pboc http://www.chinatopix.com/articles/53876/20150616/ .http:/money.cnn.com/2015/06/04/newsleconomvfim July 6 .July 31 udan University, Shanghai, China .http://www.bbc.com/news/business-27717594 Monetary Authority Monetary Policy Monetary authority"is a generic term in finance The actions of a central bank, currency board or nd economics for the entity which controls the other regulatory committee that determine the size money supply of a given currency, and has the right and rate of growth of the money supply, which in set interest rates, and other parameters which turn affects interest rates and economic activities control the cost and availability of money. uthority is a central bank Monetary easing means reducing the cost of money the Federal Reserve: Peoples Bank of China; Bank of or increasing the supply of money to stimulate the conomy when it's in recession; Other arrangements: ECB; HK Monetary Authority monetary tightening means the contrary conductions when the economy is overheating. issue notes or coin Instruments of Monetary Policy Reserve Requirements In general, central banks adjusts the money upply by increasing or decreasing the amount of money that commercial banks can lend to The amount of money that banks are required to he business sector keep on deposit at the central bank for the liquidity purpose Reserve Requirements Usually measured in the percentage of a banks Open Market Operatio total deposit i e, deposit reserve ratio Open Market Repurchase Agreements ising or cutting) RRR means the total money that be lent(from the commercial banks) to the2015/7/8 1 Fudan International Summer Session 2015 Chinese Financial Markets Part 1: Central Bank and PBoC By Zhang Xiaorong July 6th - July 31st Fudan University, Shanghai, China 1-1 Media News • http://www.china.org.cn/business/2015- 06/28/content_35926375.htm • http://www.chinadailyasia.com/business/2013- 07/31/content_15080789.html • http://www.chinatopix.com/articles/53876/20150616/ chinese-authorities-change-7-members-central-banks￾monetary-policy-committee.htm • http://money.cnn.com/2015/06/04/news/economy/im f-federal-reserve-rate-hike-2016/index.html • http://www.bbc.com/news/business-27717594 Monetary Authority • “Monetary authority” is a generic term in finance and economics for the entity which controls the money supply of a given currency, and has the right to set interest rates, and other parameters which control the cost and availability of money. • Generally, a monetary authority is a central bank: the Federal Reserve; People’s Bank of China; Bank of Japan • Other arrangements: ECB; HK Monetary Authority; Free banking where a broad range of entities can issue notes or coin. 1-3 Monetary Policy • The actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates and economic activities. • Monetary easing means reducing the cost of money or increasing the supply of money to stimulate the economy when it’s in recession; • monetary tightening means the contrary conductions when the economy is overheating. 1-4 Instruments of Monetary Policy • In general, central banks adjusts the money supply by increasing or decreasing the amount of money that commercial banks can lend to the business sector. • Reserve Requirements • Open Market Operations • Open Market Repurchase Agreements • Discount Rate 1-5 Reserve Requirements • Required reserve – The amount of money that banks are required to keep on deposit at the central bank for the liquidity purpose – Usually measured in the percentage of a bank’s total deposit, i.e., deposit reserve ratio – Raising (or cutting) RRR means the total money that be lent (from the commercial banks) to the business sector is reduced (or enlarged). 1-6