Abstract

From the perspective of monetary economics problem of excess liquidity, excess liquidity can be defined as the stock of money supply relative to the stock of excess demand for money. Unbalanced global economic development and national monetary policy, lack of coordination led to global excess liquidity, foreign exchange and international capital through other means to enter the country and has become the money supply too many external causes. From the internal point of view, since 1998, long-term accumulation of huge stock of money is to understand the key to the current excess liquidity. When the residents of asset structural adjustment to reduce the increase in monetary assets held by non-monetary assets, will lead to lack of effective demand for money. Excess liquidity will not only create asset price bubbles and the potential risks to the financial system, also caused distortions in the economic structure, on the real economy deeper impact. Liquidity surplus could be defined as the situation which money supply stock exceeds effective money demand stock from the view of money economics. Global economic disequilibrium and some countries' active money policies have brought about global excess liquidity, which aggravates China's liquidity surplus. It is the key factor to grasp China's liquidity surplus because of the big money supply gathering since 1998. Effective money demand has been decreasing because people run for non-monetary assets while giving up monetary assets. Liquidity surplus will bring about both assets bubbles and practical economic distortions