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What is the currency issuance preparation system in China?
The preparation system of currency issuance is formulated to limit the scale of currency issuance and maintain the credit of currency, requiring currency issuers to use certain metals or assets as preparations when issuing currency. Under the metal currency system, precious metals stipulated by law are used as the preparation for currency issuance. Under the modern credit currency system, the content of currency issuance preparation system in various countries is more complicated, generally including cash preparation and securities preparation. Cash reserves include gold reserves, foreign exchange reserves and other highly liquid assets reserves, while securities reserves include national bonds, short-term commercial paper reserves and other valuable securities reserves. 1 cash reserve issuance system: 100% of currency issuance is prepared by cash such as gold and foreign exchange; Securities guarantee preparation system: short-term commercial bills, short-term treasury bills and government bonds are prepared for currency issuance; 3. Flexible cash reserve ratio system: When the amount of currency issued exceeds the prescribed cash reserve ratio, the state will levy an excess issuance tax on the excess issuance. 4. Securities guarantee reserve limit issuance system: within the prescribed issuance limit, all the prescribed securities can be used for issuance preparation, and the issuance exceeding the limit must be fully prepared in cash. 5. Proportional reserve system: the proportion of cash and other securities in the currency issuance reserve is stipulated, but the proportion of various reserve assets is difficult to determine. 6. Unprepared system: the central bank does not need certain reserve assets to issue currency, that is, the state stipulates the maximum amount of currency issued by the central bank in the form of administrative regulations.