Introduction to Money and Finance —— Central Bank
Asset business refers to the use of funds by commercial banks, that is, commercial banks lend or invest the absorbed funds to obtain income. The profitability of commercial banks depends largely on the results of the use of funds. The asset business of commercial banks generally consists of the following parts, of which loans and investments are the most important.
The central bank is the dominant financial center institution of the state and an important tool for the state to intervene and regulate the development of the national economy. Responsible for the formulation and implementation of national monetary and credit policies, with unique currency issuance rights and financial supervision rights.
The central bank of China is the People's Bank of China.
The functions of the central bank are mainly to formulate and implement monetary policies and to lead, manage and supervise the activities of financial institutions. It is a "bank that manages financial activities" and has the following functions:
issuing bank
The central bank is the issuing bank, that is to say, the central bank monopolizes the right to issue money and is the only authorized currency issuer in a country or a monetary union.
1, the necessity for the central bank to centralize and monopolize the right to issue money.
First, unified currency issuance and circulation is the guarantee of normal and orderly currency circulation and currency stability. Under the condition of implementing the gold standard, the right to issue money mainly refers to the right to issue bank notes. To ensure the credibility of bank notes and the stability of monetary finance, bank notes must be convertible into gold coins at any time, and the deposit currency can be successfully converted into bank notes. Therefore, the central bank must take the gold reserve as the credit basis to support the issuance and circulation of bank notes, and the amount of gold reserve becomes the restrictive factor for the issuance of bank notes. The stipulated ratio between the issuance of bank notes and gold reserves has become the most important content of the guarantee system for the issuance of bank notes. After entering the 20th century, the gold standard system disintegrated, and the currency circulation of all countries changed into the circulation of short paper money. Banknotes that are not cashed become the national credit currency in the pure sense. Under the condition of credit currency circulation, the central bank has become a monopoly currency issuer authorized by the state based on national credit. The central bank issues money according to the objective needs of economic development and the requirements of currency circulation management.
Second, the unified issuance of currency is the need for the central bank to adjust the money supply and maintain the stability of the currency according to the economic development in a certain period. Currency stability is the basic condition for the healthy operation of social economy. If there are many issuing banks, the central bank may not be able to adjust the monetary policy in time because it is difficult to coordinate the issuing banks when adjusting the total supply and demand of money.
Third, unified currency issuance is the basis for the central bank to implement monetary policy. Unified currency issuance enables the central bank to adjust the amount of base money in circulation by controlling the currency issuance, thus adjusting the ability of commercial banks to create credit. The exclusive right to issue money is a necessary condition for the central bank to implement financial macro-control.
2, the necessary conditions for a unified currency
First, the central bank should issue money in a timely manner according to the objective needs of national economic development, keep the money supply basically consistent with the money demand, and create a good financial environment for the stable development of the national economy.
Second, the central bank should control the scale of credit and adjust the money supply from a macroeconomic perspective. The central bank should properly grasp the increment of money supply and handle the relationship between monetary stability and economic growth.
Third, according to the needs of currency circulation, the central bank timely prints and destroys currency, allocates funds from the state treasury, and adjusts regional currency distribution and currency denomination ratio.
Bank's bank
The banking function of a bank refers to the central bank as the lender of last resort of commercial banks and other financial institutions. The banking function of the bank embodies the nature of the central bank as a special financial institution and is the basic condition for the central bank to become the core of the financial system. Through this function, the central bank exerts influence on the activities of commercial banks and other financial institutions to achieve the purpose of macro-control. As a bank, the central bank should perform the following duties:
Centralized deposit reserve of commercial banks. Its necessity lies in:
First, in order to ensure the safety of depositors' funds, the law stipulates that commercial banks and other deposit institutions must deposit a deposit reserve with the central bank according to a certain proportion of deposits, so as to ensure that commercial banks and other financial institutions have the minimum payment ability.
Second, it helps the central bank to control the credit creation ability of commercial banks, thus controlling the money supply.
Third, strengthen the financial strength of the central bank. Deposit reserve is one of the main sources of funds for the central bank.
Fourth, create conditions for non-cash liquidation among commercial banks.
As the lender of last resort in the banking industry, the lender of last resort means that when a commercial bank is unable to make immediate payment and is facing bankruptcy, the central bank provides loan support to the commercial bank in time to enhance its liquidity.
The central bank acts as the lender of last resort of commercial banks mainly in two ways:
One is the rediscount of bills, that is, commercial banks post bills to the central bank to obtain funds;
The second is bill re-mortgage, that is, commercial banks mortgage their bills to the central bank to obtain loans.
Establish a national interbank clearing business platform. Commercial banks open deposit accounts in the central bank, and deposit reserve funds according to regulations. Financial institutions can use the deposit accounts of the central bank to settle funds, which speeds up the flow of funds and saves the cost of currency circulation. Thus, the central bank has become the clearing center of the banking industry.
Adjustment of foreign exchange position. The central bank conducts foreign exchange transactions according to foreign exchange supply and demand, adjusts the foreign exchange positions of commercial banks, and provides convenience for foreign exchange financing of commercial banks, thus monitoring the balance of payments.