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Monetary policy

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Introduction Monetary fxrebatecentral refers to the measures taken by the government cashback forex central bank to forexrebatecommissionfluence economic activity, especially measures to control the money supply best forex rebate company regulate interest rates to achieve specific or maintain policy objectives — — for example, curbing inflation, achieving full employment or economic growth directly or indirectly through open market operations and setting minimum bank reserves (minimum reserves ) Monetary theory and monetary policy are two sides of the same coin, one from the perspective of economic theory and the other from the perspective of policy measures Narrow and broad monetary policy Narrow monetary policy refers to the general term for the various guidelines and measures used by the central bank to control and regulate the money supply or credit quantity in order to achieve its specific economic objectives, including credit policy, interest rate policy and foreign exchange policy Broad monetary policy Refers to the policy of the government, the Central banks and other relevant departments all regulations and all measures taken in relation to money that affect financial variables (including financial system reform, that rebatesforexbroker, rule changes, etc.) The difference between the two mainly lies in the fact that the policy makers of the latter include the government and other relevant departments, who often influence exogenous variables in the financial system and change the rules of the game, such as rigidly limiting the size of credit, the direction of credit, opening and In the former case, the central bank uses the discount rate, reserve ratio, and open market operations to achieve the goal of changing interest rates and money supply in a stable system. When the economy is in recession, the central bank takes measures to increase the money supply, thus causing a reduction in interest rates, stimulating investment and net exports, and increasing aggregate demand, called expansionary monetary policy Conversely, when the economy is overheated and inflation is too high, the central bank takes a series of measures to reduce the money supply in order to raise interest rates, discourage investment and consumption, so that aggregate output decreases or slows down the growth rate and keeps the bestforexrebatecompany level The nature of monetary policy (the way in which the central bank controls the money supply and the link between money, output and inflation) is one of the most fascinating, important and controversial areas of macroeconomics. A government has a variety of policy tools at its disposal to achieve its macroeconomic objectives, including, among others: (1) Fiscal policy, consisting of government spending and taxation The main purpose of fiscal policy is to influence long-term economic growth by affecting national saving and incentives to work and save (2) Monetary policy, carried out by the central bank, affects the money supply by regulating the money supply through the central bank, affecting the interest rate and the supply of credit in the economy Monetary policy is divided into expansionary and contractionary monetary policy. Active monetary policy stimulates aggregate demand by increasing the growth rate of the money supply. Negative monetary policy is to reduce the level of aggregate demand by reducing the growth rate of money supply, under which it is more difficult to obtain credit and the interest rate increases. Cash in circulation and deposits of individuals, enterprises and institutions in banks are closely related to the changes in consumer prices, which is the most active currency and has been an important target for the central bank. According to the definition of the central bank, the arsenal of monetary policy tools mainly includes open market operations, deposit reserves, refinancing or discounting, as well as interest rate policy and exchange rate policy, etc. From an academic perspective, it can be broadly divided into quantitative tools and price tools. The main measures used in monetary policy include seven aspects: first, control of currency issuance, second, control and regulation of loans to the government, third, implementation of open market operations, fourth, change of reserve ratio, fifth, adjustment of rediscount rate, sixth, selective credit control, seventh, direct credit control.  The ultimate goal of monetary policy refers to the starting point and destination of the central bank in organizing and regulating the circulation of money, which reflects the objective requirements of monetary policy from the social economy. The ultimate goals of monetary policy are generally four: price stability, full employment, promoting economic growth and balancing the balance of payments, etc. However, it should be noted that the objectives of monetary policy in China are only to maintain the stability of the currency and promote economic growth. Article 3 of the Peoples Bank of China Law stipulates that the Peoples Bank of Chinas “ monetary policy objective is to maintain the stability of the currencys value and to promote economic growth” price stability Price stability is the primary objective of the central banks monetary policy, and the essence of price stability is the stability of the value of the currency The so-called value of the currency, originally refers to the gold content of the unit of currency, in the modern credit money circulation conditions, the measure of In modern credit money circulation conditions, the measure of currency stability is no longer based on the gold content of the unit of currency; but on the purchasing power of the unit of currency, that is, the ability of the unit of currency to buy goods under certain conditions. The price stability is a relative concept, that is, to control inflation so that the general price level does not fluctuate sharply in the short term. To measure price stability, from the situation of each country, there are three commonly used indicators: First, the average GNP (Gross National Product) index, which is based on the final products and services that constitute the GNP, reflecting the price changes of final products and services The second is the consumer price index, which is based on consumers daily expenditures and reflects more accurately the changes in consumer price levels. The third is the wholesale price index, which is based on wholesale transactions and reflects more accurately the price changes in bulk wholesale transactions. In short, in a dynamic economic society, it is impossible to freeze prices at an absolute level, the question is whether prices can be controlled within the limits allowed by economic growth. Some people think that the price level is best not to increase or not to decrease, or only allowed to fluctuate within the range of 1%, which is price stability; others think that the price level is not to increase or not to decrease is impossible, as long as we can control the price increase in 1— 2% even if it is stable; others think that the price increase of about 3% per year can be called price stability Full employment The so-called full employment goal, that is To maintain a high and stable level in the case of full employment, all capable and voluntary workers can find appropriate work at any time under more reasonable conditions Full employment, is for the degree of utilization of all available resources, but to determine the degree of utilization of various economic resources is very difficult, generally to the degree of employment of the labor force as a benchmark, that is, the unemployment rate indicators to measure the labor force The so-called unemployment rate refers to the ratio of the number of unemployed people in society to the labor force willing to be employed. The size of the unemployment rate also represents the degree of full employment in society Unemployment, theoretically speaking, indicates a waste of production resources. growth means that the growth of GNP must be maintained at a reasonable and high rate. At present, countries generally use the annual growth rate of real GNP per capita as an indicator of economic growth, that is, the annual growth rate of real GNP per capita excluding the rate of price increase to measure the annual growth rate of nominal GNP per capita. The balance of payments, as defined by the International Monetary Fund, is a statistical statement of a countrys external economic transactions during a given period, indicating: (1) transactions in goods, services, and income between an economy and the rest of the world; (2) changes in the economys monetary gold, special drawing rights, and ownership of claims, debts, and so forth to the rest of the world; and (3) changes in the economys monetary gold, special drawing rights, and ownership of debts to the rest of the world. changes in ownership of debts, etc.; (3) in an accounting sense, the gratuitous transfers and counterpart items required to balance any accounts of the above transactions and changes that cannot be offset against each other In terms of the nature of economic transactions on the balance of payments, they can be divided into two main types: autonomous transactions, or ex ante transactions, which are automatically carried out for economic purposes, political considerations, and moral motives The other is the regulating transaction, or ex post transaction, which is carried out to make up for the difference of autonomous transactions, such as obtaining short-term financing from international financial institutions, using the countrys gold reserves, foreign exchange reserves to make up for the difference, etc. If the balance of payments of a country is automatically equal to the balance of payments of autonomous transactions, it means that the countrys balance of payments is balanced; if the income from autonomous transactions is greater than the expenditure, it is called surplus. If the revenue from independent transactions is greater than the expenditure, it is called surplus; if the expenditure from independent transactions is greater than the revenue, it is called deficit. To judge whether a countrys balance of payments is balanced or not, it depends on whether the independent transactions are balanced or not, and whether it needs to compensate for the reconciliation transactions.
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