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China: Reported By: Wilma Ruivivar
China: Reported By: Wilma Ruivivar
They have set new objectives on which to focus their new policy: first, to adhere to
the "priority in national currency" and expand the cross-border use of renminbi;
second constantly promote the convertibility of the capital account in RMB; third,
consolidate the market base for the reform of the exchange rate commodification;
finally, improve the macro prudential management framework.
MONETARY POLICY ISSUES
For starters, Trump's focus on the US-China merchandise trade deficit misses the
sizeable surplus in services, notably Chinese tourism.
Secondly, there's the issue of what impact US-China trade tensions will have on the
global economy. This isn't a hard, Brexit-style structural change in the trading
relationship, we think about it as a dust up between two countries who ultimately
can't survive without each other.
Finally, focusing on trade issues misses out what's really impacting the global
economy, and for that you have to look at how China is conducting monetary
policy.
China has been tightening monetary policy during the past 18 months, and that's
meant clampdowns on shadow banking, controls on wealth management products,
curbs on local government debt, and limits on real estate lending.
HISTORY OF THE BANK OF CHINA
Founded in 1912 to absorb and replace the Ta Ching Government Bank, this is the
oldest bank in China. From its establishment until 1942, it issued banknotes on behalf
of the Central Government along with the “Big Four” banks of the period: the
Central Bank of China, The Farmer’s Bank of China and the Bank of
Communications.
It opened its first branch in Hong Kong in 1917. Although it initially functioned as
mainland China’s central bank, it was replaced in this role by the Central Bank of
China in 1928. Subsequently, it became a purely commercial bank.
After the Chinese civil war ended in 1949, the Bank of China effectively split into two
operations. The mainland operation is the current entity known as the Bank of
China. The Taiwanese portion of the bank relocated to Taiwan with the
Kuomingtang government in 1949.
Roles and responsibility of Central Bank of a Country
the primary goal of central banks is to provide their countries' currencies with price
stability by controlling inflation.
acts as the regulatory authority of a country's monetary policy and is the sole provider
and printer of notes and coins in circulation.
providing its nation's economy with funds when commercial banks cannot cover a
supply shortage.
REFERENCES
https://en.wikipedia.org/wiki/Monetary_policy_of_China
https://www.bbc.com/news/world-asia-pacific-13017877
https://www.ubs.com/microsites/china-insights/en/insights/fixed-income/2018/china-
monetary-policy-global.html
http://www.china-briefing.com/news/a-brief-history-of-the-bank-of-china/
https://www.investopedia.com/articles/03/050703.asp