China Will Grow Money Supply 17% In 2009

In a monetary policy effort designed to counter slowing domestic growth in the world's 4th Largest economy, China's State Council plans to INCREASE the country's M2 Money Supply by 17% in 2009 (money supply: the total amount of money existing in an economy at a particular time...M2 money supply: those types of monies including all physical cash reserves and banking deposits...FYI + if you're curious re the different classes/types of money supply, please refer to my 3/16/08 post titled 'Components Of Money Supply').

According to the People's Bank Of China, China's Money Supply grew to $6.7 Trillion in November 2008...a 14.8% increase over November 2007.

bloomberg.com/apps/newsablWg2RUlVmk

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* In addition to boosting its Money Supply, the Chinese government also plans to INCREASE financial institution lending activity by $584 Billion in 2009 (4 Trillion Yuan)

* The Chinese Central Bank's key one year lending rate is currently at 5.58% (down from 7.47% as recently as in September)

bloomberg.com/apps/news?pid=newsarchive&sid=ah_2uEppubgU

Data Courtesy: Bloomberg

Components Of Money Supply

Components of Money Supply:


M0: The total of all physical currency, plus accounts at the central bank that can be exchanged for physical currency.


M1: M0 - those portions of M0 held as reserves or vault cash + the amount in demand accounts ("checking" or "current" accounts).


M2: M1 + most savings accounts, money market accounts, and small denomination time deposits (certificates of deposit of under $100,000).


M3: M2 + all other CDs (large time deposits, institutional money market mutual fund balances), deposits of eurodollars and repurchase agreements.


*The Federal Reserve ceased publishing M3 statistics in March 2006, explaining that M3 did not appear to convey additional information about economic activity compared to M2, had not been used in determining economic policy, and that the costs to collect M3 data outweighed the benefits. Some of the data used to calculate M3 are still collected and published on a regular basis.



Data Courtesy: Wikipedia