Zhou Qi Ren is a top priority to keep its currency stable interest rates should be

 Zhou Qi Ren: keep its currency stable is the top priority should be to raise interest rates
Source: First Financial Daily Author: Li Bin
Zhou Qi Ren Xu l website:
objectives. From this point, you can see the internal adjustment of monetary policy in the direction of the RMB exchange rate mechanism can also understand the direction of further reform. A Financial Times the institutional level the currency issue, that the 1994 passive release due to central bank money, it is the need to confront and solve a fundamental problem.
must have made money over the consequences of
First Financial First Financial Daily: speech several times in recent years, more than your times in the currency of Super-harm. but a lot of printing money, including the monetization of the U.S. budget deficit, but also the world's primary means of national crisis. can be said that both advantages and disadvantages. how do you see such a difference? < br> Zhou Qiren: Super-currency crisis, it is the crisis and the Great Depression of 1929 to 1933 deal with the differences.
1929 is the gold standard years of the Great Depression era of the Great Depression, we have to first want to use this tool the gold standard waste. Now is the legal currency of the times can not be honored, the face of crisis, big hands can spread the money. Therefore, I consider it appropriate in 2008 to speak to this crisis is too serious. particularly in China, I have said in mid-2008, 10 , the possibility of a recession in China is equal to zero. returned to the subject, the problem is also the place that is growing in response to the crisis too severe to loose money. This post-crisis period to bring pressure on the currency situation.
first Financial Times: How should we look at inflation?
Zhou Qi Ren: I have always found the Chinese in the . such as the broad money supply last year an increase of 27.7% over the same period increased only 8.7% of nominal GDP. more out of so many, the power always comes out in the economic life.
First Financial Daily: the specific indicators, CPI was flat performance in 2009, but the real estate and stock markets are very strong, especially in the real estate market.
Zhou Qi Ren: This should be the flow equally to all the same great place, but like honey, a little sticky in some parts of the first flow, then flow to another place. where the first flow, where relative prices to rise, waves and filled with excitement . to emphasize that money as long as the occurrence of super-fat, you certainly will flow to a field. stock market up, real estate inflation, driven by real needs in addition to, Interest
First Financial Daily: This is a monetarist in the sense that inflation is a monetary phenomenon.
Zhou Qi Ren: So there is a word, money finally water. with a viscous liquid to flow to drip , a conspicuous one by a relative rise in the currency bags, finally like water, the general price level increases. However, this process has just begun, people always easily from individual commodities, individual markets were looking for contingency reasons. super fat because it is our own money, so there is always a natural tendency to consciously or unconsciously play down the problem.'ve got to Hongshuitaotian, we are all just the same, only to start treatment.
First Financial Daily: 2009 Super-currency, the current prices have been rising from the real estate and other areas first, spread to wages and prices, CPI and so on. do you think the overall price increase has been in what state?
Zhou Qiren: CPI can see it clearly and simply wait until , and often relatively late. So I recommend the Chinese of : can not say, but obviously the currency of energy in the aggregate, roaming accelerating.
First Financial Daily: interest rate policy do?
Zhou Qi Ren: We have seen February's CPI was 2.7%, there have been slight negative interest rates. It must stimulate demand for credit, the banks more money to take it out. to the tiger cage could not, you have to feed the flesh more than for others. This is not what you ask for rate hike? difficulty is that there is still worried about the U.S. Tiger does not come out, so there is still ultra-low interest rates. We are here to feed more meat, the tiger may be overseas foreign operations. This would be indecisive, and consider all aspects of policy coordination.
First Financial Daily: understanding your point of view , CPI rise in the overall price of the more rearward. then monetary policy can not just CPI, but should be included in asset prices?
Zhou Qi Ren: In fact, the national monetary authorities do not seem totally do not look at asset prices. The problem is the asset price Unlike the CPI, is easy for everyone in agreement. experience the tragedy is not easy to have a consensus, drag and waited, CPI was up action. Also, asset prices often lead to the strengthening of local control, the result can also cause observed the difficulties.
process of monetary inflation will ease
First Financial Daily: Your M2 and the GDP growth rate from the point of issuing the currency issue, China is the data M2/GDP almost rose highest in the world In 2009 dozens of percentage points. Does this mean that China will face a very long time in the future inflationary pressures?
Zhou Qiren: Money incremental than economic growth, of course, the Chinese meaning of the lingering inflationary pressure. but not no play to sing, because in addition to tightening monetary deepening process can digest a lot of money.
First Financial Daily: the so-called monetary deepening, that is, Mr. Yi Gang used . housing reform created by the real estate market in recent years to attract the best pool of money, what areas can now play such a role?
Zhou Qi Ren: China and the developed countries, different places, that is, there is still much money to deepen room. such as tenure reform, urban and rural areas, land transfer, the natural resources market, as well as education, health care, culture and so reduce the access threshold, there is money to deepen the meaning. like we see farmers in earthquake-stricken area of Chengdu to homestead mortgage loans to help reconstruction in the past do not give this right, do not place the appropriate currency movements do not have the appetite to eat money. China's market reform is to deepen the process of money over the past several waves, and including urban land market urban housing reform, hundreds of millions of migrant workers from rural to industrial cities, the process, etc., have brought money to deepen. That is why over the years is much higher than M2 growth in GDP, China's inflation has not rushed to heaven secret.
is to maintain the fundamental stability of the currency
First Financial Daily: You mentioned earlier mechanism of China's currency. In recent years the process seems to result from the exchange rate made the passive ultra-increasing pressure on the currency? < br> Zhou Qiren: Many people think that the exchange rate issue is the relationship between Chinese and Americans. In fact, the Chinese people and the exchange rate between the Chinese people. At present the central bank's base currency used to purchase foreign exchange for adding some of the hedge, came in $ 1 to 8 yuan to pay more than the past, and now less than 7 yuan RMB. the base currency is the so-called high-powered money, but also to turn money into the market, so the more foreign exchange into China, whether it is surplus, foreign direct investment, or the so-called hot money, the RMB is facing more impact on the internal stability. This model is the exchange rate objectives and monetary targets mixed treatment, it is easy the other. In my opinion, in order to sacrifice monetary stability of the currency exchange rate target, is missing the big picture.
First Financial Daily: currency stability is the first major event both internally and externally. If the yuan currency instability, there is no future opportunities. in lawful currency of the system, entrusted to the central bank should take care of the RMB. the central bank's target too much, which also call bad. insists that Daily News: So you do not agree with the constraint of RMB and U.S. dollar-linked?
Zhou Qi Ren: , it stabilizes you and stability, stable exchange rate of course. The problem is this is not today's reality. The reality is that the U.S. dollar is now very unstable. currency instability, exchange rate stability would be no, unless you let the yuan and the dollar as unreliable. So, not that we should not exchange rate stability, but the moment there is no exchange rate stability conditions. obviously unreliable link, have to hang, the results at most only a nominal exchange rate stability, and can not be stable real exchange rate eventually.
first Financial Times: This knot should be how to do it?
Zhou Qiren: way out is to separate the exchange rate and monetary appropriate to deal with. stresses in the end, the exchange rate is determined by the buying or selling, rather than yelling, shouting, threats, debate, political pressure decision. Specifically, regardless of who, where in favor of the yuan does not appreciate, and to buy U.S. dollars with the shot, if they had to buy more dollars with RMB, RMB appreciation will certainly not be. In turn, no matter who, who advocate the appreciation of RMB, as part of the United States Members and economist Paul Krugman, do not need yelling, and you shot the RMB to buy dollars, not to an increase of RMB? Of course, people may not buy enough yuan, and that our financial services industry to services should be home.
This means that, with the trading behavior to express true intentions, but also for the achievement of goals, to pay the real price. Now the exchange rate quarrel turned upside down, in my opinion is that they have to, let other bids. That is not the behavior of distortion ah?
Here, anyone can buy or sell, including the Government's exchange rate target for Admission to trading of their own. However, alone purchase of foreign central banks do not participate in the game, because the central bank hands purchasing power, that is the base currency is the currency of the currency. the central bank to buy more, currency instability, chaos everywhere, eventually, the local currency as an international currency to pay the price. the central bank to control one thing: the stability of the currency of this currency.
This is certainly not overnight. quantitative reduction of the central bank can purchase foreign exchange, until the final exit. During the target for the exchange rate, the government used to purchase foreign exchange equivalent financial strength to maintain a smooth transition.
independence
First Financial Bank Daily News: One last question, Hayek pointed out that the Austrian government monopoly money is the root of many problems, especially in the Depression, the government would abuse the right currency. the issue and related to the independence of central banks. how do you see?
Zhou Qiren: the Fed is generally considered the most independent central bank can resist all political pressures. But Greenspan said in his biography, political pressure for a long time is just not, so it looks like the Fed was very independent. not in the system the Bank of England independence, to listen to the Ministry of Finance. The key is we are in the era of a national credit currency, the currency is behind the government. This is the same in any country, the difference is the political and administrative system different forms.
on China's central bank, independent of the local government and other sectors of the State Council. mechanism to commonly accepted lessons of history, extensive sharing of information, all interaction and maintaining a long-term stability of the renminbi.