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Reduce money supply

China Daily | Updated: 2013-02-07 07:28

The recent controversy over whether China has issued excessive money reflects public worries about rising prices. Policymakers need to take heed of such concerns and find solutions to inflation.

Official statistics show that China's M2, a broad measure of money supply that includes all types of deposits and cash in circulation, exceeded 97.4 trillion yuan ($15.5 trillion) by the end of 2012, which is the world's largest money pool, 1.5 times that of the United States.

Meanwhile, China's ratio of M2 to its GDP is 188 percent, compared with less than 90 percent in the US, the world's largest economy. China has therefore been criticized for having issued excessive money.

Reduce money supply

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