Abstract
China divides the money supply into three levels: cash in circulation M0, cash that fl ows outside the banking system; the second is the narrow money supply M1, that is, M0 plus the deposit of enterprises and institutions; Money supply M2, that is, M1 plus enterprises and institutions of time deposits, household savings deposits and other deposits. In September 2008, China's monetary policy moderates easing in response to the serious impact of the international fi nancial crisis. At the beginning of 2009, the State Council put forward an annual growth of about 17% M2, more than 5 trillion yuan of new loans, relative to the expected 8% GDP growth rate and 4% of the CPI index is still a moderately easy monetary policy. China's monetary policy this shift is correct, strong with the government's active fi scal policy, the role of economic stabilization and recovery is more obvious.
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