The Comment On China’s Statutory Deposit Reserve Policy

The commercial banks raised many funds, but they could not use all of them freely, they should put the part of the funds on the central bank. The ratio of statutory reserve deposits was equal to the date that was the part funds in the central bank belonged to the commercial banks divided the all funds that the commercial banks raised. The central bank had the right to decide the ratio of statutory reserve deposits. Now I explained the effect way of the statutory reserve deposits. The central bank adjusted the date of statutory reserve deposits ratio, the commercial banks should change the funds that were used to lend according to the rule, then the sum of the whole society money would change greatly. Through the money market, there would be produce a normal rate, the rate would affect the cost and the investment, then would be influenced to the CPI and GDP.The western countries established the statutory reserve deposits system. We saw the statutory reserve deposits had a big effect to the economy, it would bring bad effect to the development of economy. Considering the bad impact, the economy of the western countries was better, they had the advanced financial market, they preferred to use the open market operations, they had given up to change the statutory reserve deposits ratio.In 1984 China built the statutory reserve deposits system. In the first time, the central bank raised a large sum of money through the statutory reserve deposits system, the money was used to invest the national projects. With the development of economy, the market could not be the good way only by the itself effect, the economy would become bad to China, then the central bank would have some actions to change the bad trend. At that time, the statutory reserve deposits ratio really exerted the effect to the economy regulation.In China, the central bank had changed the statutory reserve deposits system twice. In 1988, the central bank had changed the part of the statutory reserve deposits system, it involved how to build the account of statutory reserve deposits, the new ratio of the statutory reserve deposits, who should put the part funds in the central bank, how to punished the commercial banks if they damaged the rules. In 2004, the central bank used the different ratio of statutory reserve deposits to the different commercial banks. It involved that anyone of the commercial banks had the only ratio of statutory reserve deposits. The date was decided according to the assets of the commercial banks. If the assets of the commercial banks was good, then the commercial banks would had the lower ratio of statutory reserve deposits, if the assets of the commercial banks was bad, then the commercial banks would had the higher ratio of statutory reserve deposits. The rules was good to the bad assets of the commercial banks, it could help them change itself. The commercial banks would improve the management and the assets stats, dropped the risk of management.With the establishment of the statutory reserve deposits, the central bank had used it frequently, during the 2007 to the 2015, the whole time was 38.Due to the status, the study to the theme was meaningful. We saw that we should know the real result to the use of the statutory reserve deposits, the central bank could exert the tool, and drafted the right policy to manage the economy.