The Research On The Relationship Between The RMB Issuance Mode And Inflation

The currency issuance mode of a country, refers to the regulationsdrafted by government which regulate the details of issuance, such as, thedistribution rights,circulation and distribution conditions etc. In simpleterms, it regulates who, when and how a country can issue its currency.The currency issuance is crucial to a country’s economy, becausecurrency is the root of the domestic economy. The goals of a domesticeconomy,such as, sustained and stable economic growth, adequateemployment, stable price level and balance of international payments, areall on the premise of a perfect currency issuance mode. The approriatecurrency issuance mode will boost domestic economy, otherwise causesnegative effects on domestic economy, such as, the recession, depression,high inflation and etc.Therefore, this paper studies the RMB issuance mode and analyzesthe limitations and drawbacks of RMB issurance mode, by comparisonwith the dollar issuance mode. At first, the issuance mode of RMB hadplayed a vital role on the accumulation of foreign exchange reserves andenhancing China’s international competitiveness. However, as the development of domestic economy, the current RMB issuance modegradually reveals its drawbacks, excessive foreign exchange reserves,currency overissuce, high inflation and etc. Accordingly, this paperfocuses on the analysis and research of the root of economy problems,which is the issuance mode of RMB, and points out the trigger ofdomestic inflation. Finally this paper indicates the transtion study on theissuance mode of RMB.This paper is organised as follows:（1）Historical evolution of theissuance mode of RMB,（2）Historical evolution of the issuance mode ofdollar,（3）The theoretical research on inflation caused by the issuancemode of RMB,（4）The empirical research on inflation caused by theissuance mode of RMB,（5）The transiton research on the issuance modeof RMB.This paper concludes as follows:（1） The issuance of RMBguaranteed by the foreign exchange of enterprises has the unlimitedadditional capability, which contributes to seriously high inflaiton,（2）Itis crucial to study the transition of the issuance mode of RMB, and itshould transfer to the issuance mode guaranteed by national bond...