A Comparative Study Of Money Issuing System Between RMB And NTD-for The RMB Of The Transition Direction

By the end of2012, the total money supply of RMB has been reachto97.42trillion Yuan, top of the world and nearly a quarter of the world’stotal money supply, moreover the measure of money supply increasedyear after year, the continuous expansion of RMB total money supplyaccounted for as high as46.7%in the total money supply of the world in2012. There are many views about the situation, some scholars think thatthe people’s bank of China to issue RMB by buying foreign exchange isthe main causes of the RMB increase too fast and affect the normaloperation of the economy. This paper goes deeply into the currencysystem of new Taiwan dollars, in order to understand the differences ofRMB and NTD.RMB and NTD looks similar to issue money by buying foreignexchange from the surface of the currency system, in-depth analysis canfind both have very big difference, from the establish way of monetaryauthorities, the capital of currency, the operation of monetary policy, therelationship between the government and the central bank to buy foreignexchange way is different. The differences also makes the currency hasgreatly different impact to the economic. In this paper, it analyze thereason of the current monetary system and the history factor, and use theempirical analysis to show the influence of foreign exchange for RMBand the result of using the monetary policy tools. It can also be furtherunderstanding to the main reason of the money supply increases faster and faster in recent years.However, there are various differences between NTD and RMB, itcan find the absence of the currency system to issue money by buyingforeign exchange. NTD can still become the reference direction of RMB,and to issue money by buying government bond as well as buying foreignexchange with public finance as the ultimate goal.