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Chapter 7 Who Directs Economic Activities (3)
From another popular point of view, a currency crisis can also be said to be a situation in which people lose confidence in a country's currency and sell a large number of the country's currency, resulting in a sharp depreciation of the country's currency exchange rate in a short period of time.For example, the exchange rate of the Mexican peso against the US dollar in 1994 and the exchange rate of the Thai baht against the US dollar in 1997 fell sharply, both of which belonged to typical currency crises.Currency crisis is a kind of financial crisis, which includes not only a successful impact on a certain currency, that is, a large depreciation of the currency;For a country, the degree of currency crisis can be measured by the foreign exchange market pressure indicator, which is the weighted average of the opposite number of the monthly exchange rate change rate and the international reserve monthly change rate.When the indicator exceeds its mean by three times the mean square deviation, it is considered a currency crisis.

In the era of globalization, as the national economy is more and more closely linked with the international economy, the exchange rate is the "link" of this link.Therefore, how to choose an appropriate exchange rate system and implement corresponding economic policies has become an important issue that policymakers must consider under the conditions of economic opening.

The contemporary international economic society seldom sees an isolated incident of currency turmoil.Currency crises in one country often spread to other countries.The spread of currency crisis in the international community is called "contagion effect".

With the development of market economy and the acceleration of globalization, the stagnation of economic growth is no longer the main cause of currency crisis.A large number of studies by economists have shown that overvalued exchange rates, huge current account deficits, declining exports, and slowing economic activities are all precursors to currency crises.In terms of actual operation, currency crises are usually caused by the bursting of economic bubbles, the increase of bank bad debts, serious imbalances in the balance of payments, excessive foreign debts, financial crises, political turmoil, and distrust of the government.

Financial regulation: with the help of the "visible hand"

"Winter goes to spring, flowers bloom one after another, and warblers, birds, swallows and dancers wander about. The wind and rain come every day, and singing and singing will come and go." This ancient poem says that nature has its own laws of life, death, growth and decline, and endless growth. The market The economy works the same way.Various problems will arise in the operation of the market economy, which requires the government to play a macro-coordinating role.In macro-control, financial regulation is an essential part.

Before 1978, in order to meet the needs of the socialist planned economic system, my country established a highly centralized national banking system—the "unified" banking system—by referring to the Soviet model. "Big finance, small bank" is the main feature of this stage.The various businesses of the People's Bank of China are only supplementary to the fiscal function, and it has neither the concept of regulation nor the subject of regulation, so the concept of financial macro-control is naturally out of the question.After the Third Plenary Session of the Eleventh Central Committee in 1978, with the successive establishment of the four major state-owned specialized banks, the old pattern of "big unification" was broken. The People's Bank of China finally got rid of the specific banking business in 1984 and began to concentrate on Effectively play the functions of the central bank.At the same time, the issue of monetary policy began to attract wide attention from decision-making departments and theoretical circles, and the research on its means and goals was even more different. The concept of "macro-control" was gradually formed and put into practice.At this time, the business operation of the People's Bank of China is no longer an ordinary bank's behavior, but through the transmission of financial markets and financial institutions, it plays a guiding and regulatory role in the entire macro economy.

In the development of modern market economy, the market is the "invisible hand", while the guidance of the government is called the "visible hand".In order to overcome "market failure" and "government failure", people generally place their hopes on the coordinated use of "two hands" and the transformation of government functions under the conditions of a socialist market economy.

Macro-control is also known as state intervention, which means that the state uses plans, regulations, policies and other means to intervene and adjust economic operation status and economic relations, bring micro-economic activities into the macro-development track of the national economy, and promptly correct deviations from macro-level goals in economic operation. In order to ensure the sustained, rapid, coordinated and healthy development of the national economy.Among various regulatory means, financial regulation is often the most critical link.

Financial regulation refers to the comprehensive use of economic, legal and administrative means by the state to adjust financial market variables, ensure the stable operation of the financial system, achieve price stability and balance of international payments, and thereby promote economic development and full employment.

Usually, China's financial regulation mainly starts from five aspects.First, the central bank will focus on correctly handling the relationship between domestic demand and external demand, further expanding domestic demand, and appropriately reducing the dependence of economic growth on external demand and investment.Strengthen the coordination and cooperation of macroeconomic policies of finance, currency, trade, industry, and investment, expand consumption and domestic demand, reduce the savings rate, increase imports, and open the market to promote economic structural adjustment and promote the balance of international payments.

The second is to improve the monetary policy transmission mechanism and environment, enhance the effectiveness of monetary policy, and promote the development and improvement of financial markets.Catalyze the reform of financial enterprises and state-owned enterprises, further transform government management, improve the indirect regulation mechanism, and maintain and promote the sound operation of the financial system.

The third is to actively and steadily promote the market-oriented reform of interest rates, establish and improve the interest rate formation mechanism determined by market supply and demand and regulated by the central bank through the use of monetary policy tools, effectively use and comply with market expectations, and enhance the transparency and credibility of monetary policy.

The fourth is to strengthen the coordination and cooperation between monetary policy and other economic policies.Strengthen the coordination and cooperation between monetary policy and financial supervision, focus on the long-term development of the financial market system according to their respective divisions of labor, strive to promote the comprehensive, coordinated and sustainable development of the financial industry, strengthen the coordination of monetary policy and industrial policy, and take the national economic development plan as a guide , to guide financial institutions to conscientiously implement the requirements of national industrial policies, further optimize the credit structure, and improve financial services.

The fifth is to further improve the initiative of financial funds, vigorously expand the bond market, encourage bond product innovation, promote the development of institutional investors, increase the cultivation of trading entities and intermediary organizations, accelerate the construction of the basic system of the bond market, and further promote the coordinated development of the financial market.

Financial control is an important part of macro-control.Together with strategic guidance and fiscal and tax regulation, it constitutes the main means of macro-control.They are interconnected and cooperate with each other, and the common goal is to promote economic growth, increase employment, stabilize prices, and maintain a balance of international payments.Relatively speaking, financial regulation focuses on the aggregate and short-term goals of the national economy, but it is determined by the inherent laws of the macroeconomy, and its role will inevitably affect the structure and long-term goals.

Viewing the emergence of monetary policy from the story of "watching coupons"

There is a good story about what monetary policy is:

In one community in the United States, some young couples formed a mutual aid society to help each other with childcare.Because in the United States, it is illegal to leave children alone at home.Therefore, these young couples came up with a clever plan: Tom and his wife will leave their children to Cindy's when they want to go out today. Cindy and his wife have to take care of their own children anyway, and it doesn't take much effort to take care of a few more If Cindy's family wants to go out another day, they can leave the child to Tom's family to take care of.This idea was unanimously approved by everyone, and 150 young couples signed up to participate.This is a bit difficult, how can we ensure that everyone gets a fair chance?That is, how can each couple care for other people's children the same number of times as their own children?As a result, the managers of the mutual aid agency came up with a way: issue "care coupons" to each couple.Everyone helps each other with "care coupons".For example, if Tom's children are to be taken care of by Cindy's family for two hours, then Tom and his wife have to give Cindy and his wife two "care coupons".In this way, as long as no one forges "care vouchers", each couple's contribution will roughly equal the return.

But for some reason, after a period of time, people found that there were fewer and fewer "care coupons" in their hands, so the couples began to be vigilant and saved "care coupons" for emergencies, and they no longer loved it as much as usual. Going out, because in this way you need to use the "Guard Coupon".Because one couple's going out is another couple's opportunity to earn "watching coupons", everyone feels that "watching coupons" are becoming more and more difficult to obtain, so they are even more reluctant to go out.As a result, this mutual aid society fell into a kind of "recession" similar to insufficient aggregate demand and output below production capacity.

The helpless couples then reached an agreement to let each couple go out at least twice a month.But the problem has not been solved, and everyone is still reluctant to go out.In the end, it was the economists who came up with the idea to let the mutual aid societies increase the issuance of "care vouchers".In this way, there are more "care coupons" in circulation, and the couples have less worries about going out, so there are more opportunities to earn "care coupons" by taking care of their children... Thus, the cooperative came out of the "economic recession".Here, printing "care coupons" is a vivid and simple "monetary policy".

In finance, monetary policy also has a narrow sense and a broad sense.Monetary policy in a narrow sense refers to the policy and measures that the central bank uses various tools to adjust money supply and interest rates in order to achieve established economic goals, such as stabilizing prices, promoting economic growth, achieving full employment and balancing the international balance of payments, thereby affecting macroeconomic policies and measures. the sum of.In a broad sense, monetary policy refers to all monetary regulations and measures taken by the government, the central bank and other relevant departments to affect financial variables.Including the reform of the financial system, that is, changes in the rules.

Monetary policy is implemented through the government's management of the country's currency, credit, and banking systems.Usually every monetary policy announcement will cause widespread debate.Because monetary policy is one of the most fascinating, important, and controversial areas of macroeconomics.A government has a variety of policy tools at its disposal to achieve its macroeconomic goals.These mainly include fiscal policy and monetary policy.The main purpose of fiscal policy is to affect long-term economic growth by affecting national saving and the incentives to work and save.The monetary policy is implemented by the central bank, through the central bank to adjust the money supply, affect the interest rate and the degree of credit supply in the economy to indirectly affect the aggregate demand, so as to achieve a series of measures to achieve an ideal balance between aggregate demand and aggregate supply.

Among them, the power of monetary policy is more powerful.Monetary policy is divided into two types: expansionary and contractionary.

Expansionary monetary policy stimulates aggregate demand by increasing the growth rate of the money supply.Under such a policy, access to credit is easier and interest rates are lower.Therefore, an expansionary monetary policy is most appropriate when aggregate demand is low relative to the economy's productive capacity.

Contractionary monetary policy is to reduce the level of aggregate demand by reducing the growth rate of money supply. Under this policy, interest rates will also increase, making it difficult to obtain credit.Therefore, when inflation is serious, it is more appropriate to adopt a contractionary monetary policy.

The object of monetary policy adjustment is the money supply, that is, the total purchasing power of the whole society, and its specific manifestations are: cash in circulation and deposits of individuals, enterprises and institutions in banks.Cash in circulation is closely related to changes in consumer price levels and is the most active currency. It has always been an important target of the central bank's attention and adjustment.

The central bank generally selects some intermediary targets and uses monetary policy tools to regulate the intermediary targets, so as to promote the realization of the ultimate goal of monetary policy.The financial indicators generally used as intermediary targets mainly include: long-term interest rate, money supply and loan volume.

The traditional monetary policy in the West takes the interest rate as the intermediary target.This is because: interest rates can not only reflect the supply status of money and credit, but also reflect the relative changes in supply and demand.Higher interest rates are considered to be tightening monetary conditions, while lower interest rates are considered to be loose monetary conditions.

The reasons for the main intermediary target of money supply or its rate of change are: 1. Changes in money supply can directly affect economic activities; 2. Money supply and its changes can be directly controlled by the central bank; Policy linkage is the most direct. An increase in money supply indicates loose monetary policy, and vice versa indicates a tightening of monetary policy. 3. As an indicator, money supply is not easy to confuse policy effects with non-policy effects, so it has the advantage of accuracy.

Loan volume is also closely related to the ultimate goal.Both cash in circulation and deposit money are caused by loans, and the central bank controls the scale of loans, which also controls the money supply.In addition, its accuracy is also strong. As an endogenous variable, the loan scale is positively correlated with the demand; as a policy variable, the loan scale is also positively correlated with the demand.The common feature of these three intermediary goals is that data is easy to collect and master.

Fiscal Policy Achieves the Glory and Dream of the Euro
The significance of a country's government's financial sector is undoubtedly significant.How to coordinate the use of the financial sector and the banking sector to serve the economy has always been one of the issues that the government has explored. In 1837, after American President Martin von Bohlen took over the White House, in order to overcome the serious crisis caused by the international monetary contraction, he tried to establish an independent financial system, withdrawing all the money controlled by the Treasury Department from the banking system and storing it in In the Ministry of Finance's own system, this policy is known as the "divorce of finance and banking".Von Bohlen proposed that the government's fiscal money should be decoupled from the financial system, in order to protect the government's financial dominance and ensure economic justice and stability.With the development of history to today, government finance and banks have become the two major tools of the country's macro-control.Without government financial support, monetary policy alone cannot ensure economic stability.We can get confirmation of this from the success of the euro.

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