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An Analysis of the Endogenous Contradictions between China's Monetary Policy and Banking Supervision

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DOI: 10.25236/icemeet.2019.395

Author(s)

Su Lifang

Corresponding Author

Su Lifang

Abstract

On March 23, 2018, US President Trump formally signed a memorandum of understanding on trade with China at the White House to launch a trade war with China. On May 20, 18, China and the United States issued a joint statement on the economic and trade consultation, indicating that they had reached an agreement to jointly negotiate measures to reduce the trade deficit between China and the United States. China is carrying out L-shaped economic reform and the process of economic de-leverage. Foreign exchange write-off is very important to the stability of China's financial environment. In order to cope with the substantial reduction of basic currency, China has adopted a variety of monetary policies, such as MLF, to increase the strength of the issuance of basic currency. The core purpose of these monetary policies is to maintain the stability of the total amount of money. However, the current monetary policy in China needs to be put into the circulation of real economy through banks. This puts forward higher requirements for risk management and control of banks in China. This paper analyses the inherent contradictions between China's monetary policy and banking supervision and puts forward countermeasures.

Keywords

Foreign exchange write-off, monetary policy, currency issuance basis, banking supervision