Environment View on the Morphology of Chinese Monetary Liquidity

Abstract

This paper uses the national economic statistics and adopts statistical research methods to analyze the economic significance of bank balance sheets, and finally it confirms that credit expansion is the main source of M1 theoretical supply growth. The macro scale of credit expansion shows that the M2/GDP has continuously increased, which has aggravated the imbalance between the real economy and the monetary economy. At the micro level, the expansion of credit size has characterized by a widening of deposits and loans. The interaction between "high liquidity" and "inefficient use of assets of commercial banks" directly affects the increase in the payment risk of the commercial banking system; the indirect effect further leads to a higher M2/GDP. When the credit conditions deteriorate, it will affect the stability of the financial system.