Monetary policy, fiscal policy yu Fiscal policy is defined as the need to stabilize the economy through fiscal spending and tax policies to regulate aggregate demand. Increased government spending can stimulate aggregate demand, thereby increasing the national income, otherwise depressed aggregate demand and reduce national income. Tax on income is a contractile force, therefore, increase government revenue, thereby reducing aggregate demand can inhibit the national income, whereas, the increase in nationa l income to stimulate aggregate demand. Narrow monetary policy: that the central bank to achieve the established economic goals (price stability, promoting economic growth, full employment and balance of international payments) using various tools to adjust money supply and interest rates, thereby affecting the macro-economic policies and measures the total co. Broad monetary policy: that governments, central banks and other relevant provisions of all the currency and the impact of financial variables to take all the measures. (Including the financial system, that is, the rules change, etc.) The main differences between the two is that the latter&#39;s policy- makers including government and other departments, they often affect the financial system in the exogenous variables, changes in rules of the game, such as the rigid restrictions on the scale of credit, credit direction, opening up and development of financial markets. The former is the central bank in a stable structure in the use of discount rates, reserve ratios, open market operations to change the interest rate and money supply targets. China is currently implemented: two sound fiscal and monetary policies [Abstract] fiscal policy and monetary policy are two basic macroeconomic regulation and control policy instruments. Mainly through the implementation of the two expansion or contraction of policies, to adjust the total supply and total demand of social relations. They both have different emphases, but also closely linked, we should grasp and correctly handle the relations between the two, coordinated and flexible based on actual use of fiscal policy and monetary policy, to fully play its due role, ensuring healthy and sustainable national economy rapidly Fazhan . State regulation of supply and demand of social capital should be avoided as much as possible administrative intervention, but should be mainly using economic means to guide, not obvious when the effects of monetary policy, the fiscal policy should play to its leading role. At the same time, maintain a certain scale of national debt, not only of financial policies important means of control, Er Ju Wei Zhongyangyinhang Fazhan can also conduct bond market, money market operations Tigongbiyao conditions Gong Kai, Zeng Qiang effectiveness of monetary policy transmission mechanism. Fiscal policy and monetary policy are two basic macroeconomic regulation and control policy instruments. Mainly through the implementation of the two expansion or contraction of policies, to adjust the total supply and total demand of social relations. They both have different emphases, are also closely linked to accurately and correctly handle the relationship between the two, according to the actual situation of co-ordination and flexible use of fiscal policy and monetary policy in order to fully play its due role to ensure the sustained, rapid and healthy development of national economy . First, financial bonds issued to banks to adjust the size of the money supply is an important channel In today&#39;s society, a country&#39;s monetary aggregates are defined by their monetary unit that the purchasing power of the total amount of social currency, including cash (or cash) and bank deposits (&quot;deposit money&quot;), which, increasingly the proportion of bank deposits The larger the cash is a very small proportion. Therefore, the so-called money supply, not only refer to cash the running, but more is the deposit money supply. Currently running a channel of currency are: 1, the central bank bought the note- issuing gold reserves (or other reserve materials); 2, the central bank to buy foreign exchange reserves; 3, the central bank to buy government bonds or to the Government (Finance) overdraft; 4, the central bank various types of loans to bank loans, or loans held by banks to buy treasury bonds, central bank notes, financial bonds and loans to banks through lending to the community; 5, after the lending bank deposits, in addition to deposit a certain proportion of deposits bank deposit or maintain a certain provision for deposits, the loans to the community, and loans for the formation of the multiplier effect; 6, outside the central bank to buy all kinds of bank bonds, corporate bonds and foreign exchange. In addition, the total purchasing power of money from the whole country watching, foreign capital inflow and outflow of domestic currency will affect the social currency within the total (this should be a net inflow or net outflow of specific analysis). China&#39;s current money supply the most room for adjustment channels, one bank loan, which is a main channel of money supply; Second, various banks to buy treasury bonds and financial costs to the community through the money invested. Other sources put monetary room for maneuver is limited. Here, the finances of the bank issued treasury bonds, it means that banks increase the money supply (which will also form a financial multiplier effect of running); financial payment to the bank issuing the bonds, it means banks to reduce money supply (increase Huobihuilong). In other words, our budget also reflects not only the collection and payment of social currency, reflecting the redistribution of social currency, and financial bonds issued to banks to adjust the size is an important channel for the total money supply. This is also the fiscal policy and monetary policy is closely related to the importance of performance. Second, the use of two channels, effectively regulate money supply in particular, &quot;the money in circulation&quot; In general, the total amount of social currency is expressed in purchasing power in money amount, that is, aggregate demand, but a time to see the community there will always be a part of the total money from the social production and circulation and settle down, do not form current actual purchasing power. Therefore, the total amount of social currency and can be classified as &quot;money in circulation&quot; and &quot;settling the amount of money&quot; in two parts. True impact of effective demand for a certain period of society, not entirely social monetary aggregates, but mainly the money in circulation. Of course, changes in the money in circulation and changes in monetary aggregates are closely related. From monetary and fiscal policies on the social monetary aggregates, particularly the regulating role of money in circulation to see, there are significant differences between the two, can not substitute each other. From the basic object of monetary policy bank loans ---- put money situation, the formation of capital in loans is debt capital, are generally prescribed term of the loan, due to debt service, interest on loans is the loan price or cost. It therefore put more of the trading behavior of funds, can put out, and the number of actual delivery, depending on the wishes of buyers and sellers and bank credit funds of the scale, rather than unconditional. Among them, the bank can lower interest rates and loan conditions to increase the loan demand, but lower interest rates to stimulate demand for loans is limited to the role, especially in a lack of full cost efficiency awareness and constraints of Shehui especially; Er regardless of cost, abuse regardless of the risk is placed loans banks do not meet the principles and regulatory requirements, is strictly controlled. The growth of bank loans Basically, the decision on the future income of the borrower or the expected investment return and confidence. Lack of effective demand in the face of loans, there is deflationary pressure situation, through expansionary monetary policy to stimulate the role of money demand is often very limited. However, strong loan demand in the community, increase the money in circulation, is facing inflationary pressures, the bank as money providers, in the role of money it will put far more money invested in expanding its role. In addition, banks by raising or lowering deposit interest rates, can be adjusted to some extent the social Cunkuan intention, and thus a certain extent on the amount and currency adjustme nts Chendian money in circulation Bi Li, Dan also affected by social Cunkuanyixiang many factors, in particular is also income and expenditure by the future impact of expected changes, a simple adjustment of the deposit interest rate regulation is limited. From fiscal policy on monetary aggregates and the impact of money in circulation terms, the strong will of the social savings, investment and insufficient consumer demand, by issuing government bonds to absorb some of the social precipitation money (including bank sedimentation funds), and by expenditure running out, can be directly and effectively adjust the current amount of money precipitated the quantitative ratio and the currency in circulation, and through improving the investment climate lead private investment, improving social expenditure is expected to reinforce their right 未来 confidence in economic growth, thereby stimulating investment and consumption society demand. But the issue of bonds the state debt to society is to be returned, therefore, must ensure quality and efficiency of the bond investments, and to avoid the financial investment and generate increased private investment &quot;crowding out effect.&quot; The total amount of bonds issued must be controlled within the scope of affordable finance, to avoid serious financial crisis. At the same time, also Bixu see, financial investment is one kind of equity investment, which Dai Biao Zhao pair of Pi Investment 企业 or 项目 title, and thereby enjoy the right to be invested enterprises and project management, dividends and Chuzhi of Quan Li, but does not urge Qi return of investment in power. This means that the fiscal expansion of capital investment, when faced with inflationary pressures, the need to control money supply, it is necessary to recover the investment is very difficult, for some investment projects with longer, if the rush Tingzhi follow-up investment may cause significant loss of Huan . Monetary policy and fiscal policy under different circumstances not only in regulating the monetary aggregates, particularly the impact of money in circulation is different from financial investments and bank loans and the nature is completely different. To correctly understand and accurately grasp the essence of both features and fundamental differences, give full play to its proper functions, but could not mixed up. Has been practiced in China, &quot;Bo Gaidai&quot; will state funding for state-owned enterprises (investment) to unity by bank loans, this despite a period of time to address the special problems played a positive role, but the impact of bringing new far-reaching problem: a serious lack of business capital, financial burden; will solve the funding to finance bank loans, the loans the banks have lost control of standards and autonomy, bank teller to become the financial and Planning Commission; bank loans instead of grants enable enterprises to get loans are not also the reason (investment return of the problem does not exist), resulting in a serious state-owned banks do not repay the loan business integrity. These are all worthy of our serious lessons learned. Should be emphasized that fiscal policy is a manifestation of national intent, although policy- making within the delay is rather long, but, once established, its implementation with mandatory external delay is very short. The adjustment of monetary policy is largely dependent on deposit and lending rates, deposit reserve ratio, bills rediscount interest rate and refinancing interest rates, indirectly, to adjust deposit and loan interest and private interest and other bank loans, through multi-channel transmission links can be effective, so , the external delay is relatively long. Continue to promote sound market mechanism, the state regulation of supply and demand of social capital should be avoided as much as possible administrative intervention, but should be mainly using economic means to guide, in this case, when the little effect of monetary policy, the fiscal policy should play should have the leading role. At the same time, maintain a certain scale of national debt, not only is fiscal policy control 重要 means, and can be Wei Zhongyangyinhang Fazhan bond market program has been monetary Gongkai 市场 operation provides the necessary conditions, to increase monetary 政策 conduction is effective. Shows that monetary and fiscal policies must be closely and support each other, not each other instead of each other shirk. Third, the monetary aggregate and control the money in circulation and standard to Monetary aggregates or the regulation of aggregate demand is a very complicated matter, to accurately grasp the direction and scale adjustment is difficult, but is the key issue that must be clear. We know that regulate monetary aggregates and the main purpose of the money in circulation is to maintain economic stability and moderate growth, keeping prices relatively stable, thus ensuring maximum employment, social stability and development of foreign trade. Accordingly, we can be sure, monetary aggregates and to determine the growth rate of money in circulation depends on the national economy (gross domestic product GDP generally indicated) growth target and the consumer price index changes in goal. How much economic growth to maintain or floating range of the consumer price index fluctuations in control in much of the range, as an important national economic plan needs to be looked at and report to National People&#39;s Congress approved targets. These two indicators is confirmed, you can determine the money supply, according to the control objectives. As the repayment of money supply or the impact on GDP has lag, so the money supply target growth rate is also affected by money supply growth rate and GDP growth rate correlation function (referred to as &quot;relations function&quot;) of. Determine the exact function of this relationship, an accurate grasp of the money supply control goals. In order to maintain the continuity of monetary policy, money in circulation to avoid the ups and downs, &quot;relations function,&quot; in accordance with the previous three years (or appropriate time) the money supply (M2 approximate to that), and the money in circulation (approximately expressed by M1) The growth rate of GDP growth in the same period the average ratio of M2 and M1 were confirmed to the relationship between the function. On this basis, then targets the major issues found during the potential impact as &quot;adjustments&quot; taken into account, you can determine the target growth rate of M2 and M1. The formula is: M2 target growth rate = GDP growth rate × M2 relations function target ± target rate of change in the price adjustment for M1 ± target growth rate = GDP growth rate × M1 relations function target price target rate of change ± ± adjustments in the actual implementation , if the actual growth rate of M2 and M1 growth rate of occurrence of large deviation with the target (such as a difference of 3 percentage points), GDP price index, or the actual rate of change in large deviation occurs with the target (such as below the minimum target value or high The maximum target value at more than 0.5 percentage points), the reverse should be properly adjusted. Thus, the regulation of money growth direction and goals were clearer. Determined the direction and regulation of money growth target, we must adjust and coordinate fiscal and monetary policies to ensure monetary growth control goals. In short, fiscal policy and monetary policy as a national macroeconomic regulation and control of the two basic policy instruments, both regulatory priorities and different means of regulation have different impact and scope, but also in close contact, mutual influence, we must correctly understand and accurately handle relationship between the two in order to exert their expected positive effects.