The Influence Factors, Risk Prevention And Legal Regulation Of The Money Supply

To determine the money supply scientifically and reasonably is thecore of monetary policy, and the key to affecting the development ofmacroeconomic and financial industry. Theoretical research and empiricaldata have confirmed that the traditional quantitative principle of moneysupply is losing its reference value, under which the endogenous monetarysupply gradually thrives. Therefore it is necessary to re-examine themechanism of money supply.Based on the endogenous supply theories and oriented toward riskprevention, this paper proposes that in determining the money supply, weshould consider the relationship between the money supply and thedevelopment of domestic production, capital flow, and foreign trade. Inaddition, we should comprehensively consider the influence of suchendogenous factors as commodity price, asset price, the volume of foreigntrade and foreign exchange, and be committed to reducing inflation, assetbubbles and losses on exchanges and other economic risks with proposing anew framework of multiple target for the analysis of China’s moneysupply. A range of problems arise with the implementation of China’smonetary policy in recent years. The probability of systemic risk constantlyincreases, which brings serious side effects on both economy and society.From a law and finance perspective, the reason of these problems lies in theambiguity of the principle of money supply, the lack of cooperation amongdepartments involved and the imperfect of related reform measures.Insisting on the combination of the total control and the structural control,we should improve the legal regulating system of the money supply whichis based on the Law on the People’s Bank of China and supported by theLaw on Commercial Banks, the Law on Banking Regulation andSupervision, Securities Law and Regulations on Exchange Control, andprompt the development and implementation of monetary policy morescientifically and reasonably.