| Abstract | The paper intends to present a review on the pros and cons of flow approach and stock approach, a traditionally controversial topic in the history of monetary theory. In view of its relation to savings effect and the structure of financial right, the issue will carry a special significance to the understanding of the monetary logic in China’s financial reform. The paper finds that flow approach, represented by Tsiang, S. C. and some other economists, seems to have held the upper hand. Yet, due to its rigid confinement to the full market assumption and its failure to tackle the challenge posed by the logic of the dual origin of money, their analysis ended up in vain in the effort to reestablish theoretical paradigm. Later, the progress of the financial reform in China offered a rare opportunity to test the validity of the two approaches, for it brought into surface the structure of financial right that had been hiding underneath. Thus, money analysis might therefore be able to step onto the correct path leading to the reestablishment of the institutional paradigm of financial analysis. |