Reforms in China’s Monetary Policy Reforms in China’s Monetary
A Brief Discussion of the Ideological Roots of
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| A Brief Discussion of the Ideological Roots of
Conventional Money Theory 1 In conventional money theory, it is difficult to explain money creation and banking operations both in terms of logic and practice. To rationalize the tra- ditional theory, the financial theorists have created many new concepts and ideas to fill in the gap in the conventional theory. However, the conventional theory was built on misconceptions, and the outcome will usually be con- trary to what is intended in practice. For example, when commercial banks are preparing their business plan for the next year, they would first forecast the growth in deposits for the next year and then project the growth in loans within the range. Yet, when loans are issued at a faster rate in the follow- ing year, the growth in deposits will be faster than expected, and loan fore- casts are adjusted upwards followed by an increase in deposits, and the cycle goes on. Nevertheless, the problem is that in such a long period of time, the problems of both theory and practice do not undermine the authority of the conventional money theory. The publication of my work “Money Creation and Bank Operations under the Credit Money System” in 2001 resulted in a heated debate. ome new concepts have gradually been accepted by the theorists and the financial circle as of today; however, the concepts in the conventional theory emerge from time to time and disrupt peoples’ thinking and behaviors. Accordingly, my doubt over the timeliness of the conventional money and banking theory is more than my doubt on the theory itself. I also found that the conventional money and banking theory has been wide- spread and deep-rooted. I therefore have a considerable interest in observing its basic phenomenon and exploring the roots of thoughts so as to distinguish 8 ● Reforms in China’s Monetary Policy the underlying reasons behind its origin and development. Over a decade of study, I have summed up the reasons in the following five aspects: tải về 1.53 Mb. Chia sẻ với bạn bè của bạn:
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