question archive To control the money supply and prevent inflation, the People’s Bank of China (PBC), which is confronted with a permanent current account and capital account surpluses, uses mostly two tools to sterilize the foreign currency inflows: the variation of the Required Reserve Ratio (which obliges the banks to make a deposit to the Central Bank corresponding to a percentage of the credits they grant) and the selling of “Central Bank Bills”
To control the money supply and prevent inflation, the People’s Bank of China (PBC), which is confronted with a permanent current account and capital account surpluses, uses mostly two tools to sterilize the foreign currency inflows: the variation of the Required Reserve Ratio (which obliges the banks to make a deposit to the Central Bank corresponding to a percentage of the credits they grant) and the selling of “Central Bank Bills”
Subject:BusinessPrice: Bought3
To control the money supply and prevent inflation, the People’s Bank of China (PBC), which is confronted with a permanent current account and capital account surpluses, uses mostly two tools to sterilize the foreign currency inflows: the variation of the Required Reserve Ratio (which obliges the banks to make a deposit to the Central Bank corresponding to a percentage of the credits they grant) and the selling of “Central Bank Bills”. Elaborate and explain the pros and cons of each type of intervention.
