Studies Of The Effect Of China’s Statutory Deposit Reserve Policy

The statutory deposit reserve system has been used by China since China hasreform and opening-up policy. The statutory deposit reserve policy is an economicpolicy which is frequently used to adjust macroeconomics. From January12,2010toNovember30,2011, China has13times to adjust the financial institutions of RMBdeposit reserve ratio. Whether the statutory deposit reserve system has played apositive role in the macroeconomics, Chinese scholars is full of controversy.Statutory deposit reserve system is originated in the United Kingdom, and finalizedin the United States. In the process of economic development of the Westerndeveloped countries, the statutory deposit reserve system is gradually formed. In thebeginning,the fund settlement of commercial banks in the United Kingdom fundneeds to be part of the resefund stored in the Bank of England. After the GreatDepression in Western countries, Western developed countries pay more attention tothe use of the statutory deposit reserve policy.The central bank use the statutorydeposit reserve system to control the bank’s total deposits and loans. This effectivelyprevents the negative role played by commercial banks with the unlimited expansionof credit to the economy. This also prevents commercial banks running oncommercial bank goes bust. This effectively maintains the safety of depositors’money and the legitimate rights and interests of the depositors.However, as amonetary policy, the statutory deposit reserve policy has negative effects.In order toregulate the economy,the central bank need to grasp the situation accurately.But thisis difficult. Statutory deposit reserve policy regulates the economy well,but at thesame time,sometimes,it has bad effect.In the process of the developing of thedeveloped countries, statutory deposit reserve policy has played different roles.Fromthis paper,I study the establishment of statutory deposit reserve policy and the use ofwestern countries.I also study the establishment and the improvement and the effectof statutory deposit reserve policy in China.From my study in this paper,I have a conclusion:China need have an improvement in statutory deposit reservepolicy,instead of abandoning it.