Peoples Bank of China
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Monetary policy relates to how the government controls aggregate supply of money, which in the short-term can affect relative prices of goods within the economy and over a longer term, alter the relative price of domestic currency to foreign currencies. The object of monetary policy is to influence the performance of the economy as reflected in such factors as inflation, economic output, and employment. It works by affecting demand across the economythat is, people's and firms' willingness to spend on goods and services.
In the United States, monetary policy is made by the Federal Open Market Committee, which consists of the Board of Governors of the Federal Reserve System and the Reserve Bank presidents.
In China, the monetary policy is established by the People's Bank of China (PBC). The PBC, similar to the U. S. Federal Reserve, implements policies that will promote economic growth and ensure the stability of the Chinese financial industry. By maintaining a secure financial environment, companies will be encouraged to expand to China, thus increasing imports, creating jobs, and increasing national wealth.
This paper aims to explore the effect of the US and China's central bank in controlling domestic inflation and how the US and PBC's central bank can increase or decrease the money supply as well as the relationship between the central bank and the government...