2016/9/20 China M2/GDP Broad Money as %of GDP China 2-1x 119.0 2008 150084320911666129.1 176.69042270170.61360 177584722611687 1312 20111759872238015531314 2012 1824 878241.3153.0 133.3 20131882884247815091344 2014 1930 1399 Source: World Ba Monetary Policy Example Example: the US Fed the us fed and 911 Attack · The Fed' s Mission Official Duties " The Federal Reserve System is the central bank of Conducting national monetary polic the United States. It was founded by Congress in regulation of other banking entities to protect 1913 to provide the nation with a safer, more consumer credit rights flexible, and more stable monetary and financial maintain national financial security system. Over the years, its role in banking and the economy has expanded. The Federal Reserve Website Example: the US Fed Response of the Fed to 9/11 Structure of the Federal Reserve Aim: To increase liquidity and All appointed by the president maintain financial confidence Current chairman -Janet Yellen · How was this achieved? Board of directors 1. Open market operations 2 federal reserve bank 2 committees: Federal Open Market Committee-Monetary 3. Daylight overdraft fees scrapped 4. The establishment of Swap Federal Advisory Council- Advisory Board 52016/9/20 5 1‐25 China M2/GDP 0.82 0.89 0.940.990.971.00 1.07 1.15 1.24 1.341.36 1.44 1.54 1.631.591.621.60 1.521.51 1.781.811.80 1.88 1.951.93 2.06 0.80 1.00 1.20 1.40 1.60 1.80 2.00 2.20 Broad Money as % of GDP China USA Japan UK Korea 2005 152.2 71.9 206.6 122.5 111.1 2006 158.8 74.1 204.0 132.1 119.0 2007 150.5 79.2 202.8 145.0 122.1 2008 150.0 84.3 209.1 166.6 129.1 2009 176.6 90.4 227.0 170.6 136.0 2010 177.5 84.7 226.1 168.7 131.2 2011 175.9 87.2 238.0 155.3 131.4 2012 182.4 87.8 241.3 153.0 133.3 2013 188.2 88.4 247.8 150.9 134.4 2014 193.0 89.5 251.2 140.9 139.9 2015 205.7 90.3 251.9 137.8 144.2 Source: World Bank 1‐26 Monetary Policy Example: the US Fed and 911 Attack • The Fed’s Mission – "The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.” ‐ The Federal Reserve Website 1‐27 Example: the US Fed • Official Duties – Conducting national monetary policy – regulation of other banking entities to protect consumer credit rights – maintain national financial security – provides financial services to the US Government, official foreign institutions, and helps manage the nation's payment system 1‐28 Example: the US Fed • Structure of the Federal Reserve – All appointed by the president – Current Chairman ‐ Janet Yellen – Board of Directors – 12 federal reserve banks – 2 committees: • Federal Open Market Committee ‐ Monetary Policy • Federal Advisory Council ‐ Advisory Board 1‐29 Response of the Fed to 9/11 • Aim: To increase liquidity and maintain financial confidence • How was this achieved? 1. Open market operations 2. Direct lending of funds via the Discount Window 3. Daylight overdraft fees scrapped 4. The establishment of 'Swap Lines' 5. 50 basis points cut 1‐30