Explore The Causes And Countermeasures Of China's Banking System Excess Liquidity

There is no doubt that Chinese economy has to face a fact------excess liquidity now. It has become an important problem in the country's economy system, especially from 2006. This article focuses on excess liquidity in Chinese economy under the background that "Using several currency policies and tools in combination and reinforcing liquidity management" has been mentioned a few times by Chinese government.The article is divided by five chapters. In introduction part, the first chapter, the meaning of the title of this article has been elaborated, current situation of researching in this topic has been reviewed, the construct and innovation of this article have also been pointed out. "Excess liquidity in bank system" means the state of keeping expanding of the difference of deposit and loan and keeping falling of the ratio of loan to deposit of financial institution, and a judgment of it has been described in Chapter two, of course there are also some weakness in measuring the index of the degree of excess by "difference of deposit and loan" (ratio of loan to deposit). The influence of excess liquidity (most are negative) in bank system, real state controlling, stock market and the effect of macro-control is analyzed in chapter three, to demonstrate the necessary of neutralizing excess liquidity. Chapter four is the core of the whole article, reasons of excess liquidity in Chinese bank system has beenanalyzed. The analysis is in three modes----short term mode, middle term mode and long term mode. The reason in short term mode is shareholding reform of government owned banks. The expectation of rise of RMB is the reason in middle term mode, for long term mode, it's more complicate than the last two modes. It is the combined result from unbalance of international payments, credit squeeze caused by "the principle of prudent loan" in commercial bank and high saving ratio caused by uncompleted social security system. How to solve the excess liquidity problem in short term, middle term and long term? The answer is provided in the fifth chapter, and a new point of view is pointed out that there is an opportunity to reform rate-forming mechanism and market mechanism when neutralizing excess liquidity.