Money Creation Mechanism of Offshore RMB Market and its Influence on Money Supply of China
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| Title | Money Creation Mechanism of Offshore RMB Market and its Influence on Money Supply of China
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| Author | Wu Ge and Yang Ning |
| Organization | The Peaple’s Bank of China |
| Email | wuge@pbc.gov.cn, wugefd@hotmail.com |
| Key Words | Offshore Market; Money Creation; Money Supply; Monetary Policy |
| Abstract | In recent years, the rapid development of cross-border RMB business and offshore RMB market has triggered concerns about its influence on the effectiveness of monetary policies of China. Based on the literatures on money creation mechanism of offshore USD market and the current framework of cross-border RMB business and offshore RMB market, we creatively analyzes the channels of RMB cross-border flow and domestic and foreign RMB accounts systems, illustrates the money creation mechanism of offshore RMB market, and evaluates offshore RMB money multiplier from relevant statistics. We further try to start from the balance sheets of domestic and foreign financial institutions and statistical scope of money, and examine the concrete influence of offshore RMB market on money supply of China. In a word, this article aims at systematically building the theoretical framework of money creation of offshore RMB market, and providing base for further study about the influence of offshore RMB market development on monetary policy of China. |
| Serial Number | WP760 |
| Time | 2014-11-20 |
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