1. The central bank's increase in foreign exchange reserves will lead to an increase in the money supply, but different ways of increasing funds will produce two completely different results.
2. If the central bank prints money to buy gold, it will increase the money supply and Jin Chen will expand the money. If it prints money to buy gold at home, it will directly lead to the inflation of money supply, while if it prints money to buy gold abroad, it will indirectly lead to the inflation of money supply, because foreign currency holders will come to China to buy goods sooner or later, so this inflation has the characteristics of slow uphill.
3. However, if the central bank uses its own foreign exchange to buy gold, the domestic money supply will not increase, but will reduce foreign exchange reserves and increase the independent rights of its own currency, which is actually a complete liquidation of international trade.
It is easier to lose money than to make money. If China buys gold with a large amount of foreign exchange, it will inevitably lead to indirect inflation and financial tension in foreign exchange issuing countries, worsen the international political and economic situation, and even lead to war. Because this is a tiger's mouth, although the foreign exchange reserves are owned by the state, the foreign exchange reserves basically belong to the scale of the loss of national monetary sovereignty. Therefore, all western economic powers use gold as their currency issuance preparation, and no country hoards foreign exchange losses to win money like China.
1. Increase. The central bank will increase gold foreign exchange reserves and the money supply will increase.
2. Gold and silver foreign exchange reserve is always an important reserve to stabilize paper money, and the central bank can adjust the circulation of funds and currency by buying and selling gold and silver foreign exchange. When the central bank increases its gold foreign exchange reserves, it can increase it by buying from the public, and the money paid will lead to an increase in the money supply.
3. Money supply refers to a country's money stock that serves the social and economic operation at a certain point. It consists of two parts: deposit currency and cash currency supplied by financial institutions including the central bank.