To control the money supply and prevent inflation, the Peoples 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 inflow the variation of Required Reserved 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
To control the money supply and prevent inflation, the Peoples 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 inflow the variation of Required Reserved 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
Chapter1: Making Economics Decisions
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To control the money supply and prevent inflation, the Peoples 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 inflow the variation of Required Reserved 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
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