monetary base control

monetary base control

the control of the MONETARY BASE of the banking system as a means of regulating a nation's MONEY SUPPLY. If the COMMERCIAL BANKS adhere to a well-defined CASH RESERVE RATIO, then the monetary authorities, by controlling this narrow monetary base, can regulate monetary growth. See BANK-DEPOSIT CREATION, RESERVE-ASSET RATIO, MONEY SUPPLY DEFINITIONS, MONETARY POLICY.
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The adoption of a monetary base control was agreed upon "with the view of pursuing quantitative monetary easing," the BOJ said.
Not only did I strenuously oppose Friedman's monetary base control mechanism and his K% rule for monetary growth, but I have been credited, though without much justification, for example in The Times obituary of Milton Friedman (17 November, 2006), with having undermined monetarism by pointing out the likely instability of demand for money functions when turned into targets.
Generally, the prerequisites for China's successful indirect money aggregates management at least include a soundness of the banking system, effective monetary base control, and reliable multiplier predictions.