The currency exceeded 43 trillion yuan. "It is actually too late for the central bank to raise interest rates. Currency overshoot has been so serious. It is time to implement austerity policies to curb inflation. " Xie Guozhong, director and independent economist of Rosestone Consulting Company, told the reporter: "We have seen that the rise of agricultural and sideline products, including mung beans, ginger, garlic and peppers, is actually the result of the excessive currency of the central bank. Excess money flooded the market. The excess money accumulated over the years has brought huge inflation risks to China economic entities. " According to the data disclosed by the National Bureau of Statistics, in September this year, China's CPI rose by 3.6% year-on-year, hitting a 23-month high; In that month, food prices rose as high as 8% year-on-year. Then, is the gradual increase in CPI year-on-year caused by currency overshoot? "Inflation is a monetary phenomenon at any time and anywhere"-this is a classic saying of Friedman, the founder of the monetary school. According to the basic principle of monetarism, the central bank, as a currency issuer, should also supply 1 yuan for the value of each 1 yuan of a country or region's economy, and the money supply exceeding 1 yuan is regarded as excess. Due to the market-oriented reform and other reasons, the commercialization of resources has intensified in emerging market countries, and it is reasonable that the broad money supply is moderately higher than the GDP growth of economic development. However, excessive money supply can easily lead to inflation. The relationship between inflation and currency overshoot has also been recognized by many China scholars. Zhou Qiren, an economist and member of the Monetary Policy Committee of the Bank of China, recently warned in his blog that "the tiger of money is getting bigger and bigger". According to statistics, at the end of 2009, China's GDP of 33.54 trillion yuan was 92 times that of 1978 of 364.52 billion yuan. In the same period, the broad money supply (M2, broad money = cash in circulation+bank time deposits+savings deposits+customer deposits of securities companies) increased from 85.945 billion yuan in 1978 to 60.62 trillion yuan at the end of 2009, a 705-fold increase. Wu Xiaoling bluntly said: "In the past 30 years, we have used excessive money supply to promote the rapid economic development." According to official data, the total GDP of China in 2000 was 8.9 trillion yuan, and the broad money supply was 13.5 trillion yuan, which was10.5 times of GDP, 4.6 trillion yuan more. In 2009, the total GDP of China was 33.5 trillion, and the broad money supply was 60.6 trillion, which was 1.8 times of GDP. Judging from the current trend, the ratio of broad money supply to GDP is further increasing. According to the data of the central bank, at the end of September this year, the broad money balance had reached 69.64 trillion yuan. According to the GDP of the first three quarters announced by the National Bureau of Statistics, it reached 26.866 trillion, and the excess currency was nearly 42.774 trillion. Insufficient operational independence of the central bank? Some scholars believe that the biggest reason for the excessive currency in recent years is the deflation worries brought to China after the financial crisis. From June 5438 to February 2008, Fan Gang, an economist who was then a member of the central bank's Monetary Policy Committee, hinted in an interview with China Economic Weekly: "In the era when the central bank has the right to issue money, deflation is not easy to occur." This means that after the economic crisis, the central bank's monetary policy Committee has the idea of supporting economic growth through excessive currency issuance. As a result, the goal of "strive for the growth of broad money supply around 17%" determined by the Central Economic Work Conference in February 2008 was finally manifested by the growth of 27.7%, which was higher than 10 percentage point. Some scholars believe that it is the "extremely loose" monetary policy of the central bank that has pushed the situation that the central bank has "actively" promoted the currency overshoot in the past 30 years (especially in the recent 10 year) to the extreme. When explaining the reasons, Wu Xiaoling told China Economic Weekly: "In the past many years, there was a problem that the central bank's regulation was not in place. On the one hand, the central bank itself has a mature process, and the regulation technology has gradually matured. On the other hand, the operational independence of the Bank of China needs to be improved. " However, Wu Xiaoling also said that it is impossible for the Bank of China to remain independent when formulating monetary policy. "The Bank of China is a member of the Cabinet. If it is more independent in operation, I think it may be better to standardize it. " Although Wu Xiaoling believes that a considerable amount of money has been absorbed by the marketization of new commodities (resources, land, etc.) in the past 30 years. ), she still can't accept that the ultra-high money supply currently implemented by the central bank is "reasonable" and "reasonable". Wu Xiaoling suggested that if the China government reduces the GDP growth rate to 7.5%~8% during the Twelfth Five-Year Plan period and raises the CPI control target to 4% in the next few years, the growth rate of broad money should be controlled below 13% ~ 14% in the next few years to cope with the flood of liquidity. Judging from the central bank's monetary policy in the next two years, it is urgent to gradually tighten the growth rate of money supply and digest excessive money supply. How to digest extra money? How to digest extra money? This is an extremely complicated and difficult problem. With the internationalization of RMB, RMB will inevitably form settlement currency from cross-border trade settlement in the long development process, and then become the reserve currency of various countries. If so, in the long run, don't you have to worry about the way out for RMB overspending? Previously, Xia Bin, member of the Monetary Policy Committee of the Central Bank and director of the Financial Research Institute of the State Council Development Research Center, had worried that the internationalization of RMB would have an impact on the central bank's control of domestic credit scale. He told China Economic Weekly: "If the overseas RMB increases, it will have an impact on the central bank's regulation of broad money and test the central bank's regulation ability." However, in the short term, it is neither realistic nor feasible to solve the problem of currency overshoot by RMB internationalization. Wu Xiaoling admitted to China Economic Weekly that the calculation of a country's sovereign currency can only be based on the domestic inflation target, and the regulation of the national money supply should be realized by promoting economic growth. It is difficult to measure or regulate the money supply by adding international circulation factors. Zhou Qiren said frankly in his blog that according to the early experience of China's reform-"more water and more aspects", the more reasonable policy combination seems to be: or mobilize more resources to enter the market and digest the ever-surplus currency; Or slow down the pace of market-oriented reform, but strictly control the excessive currency.