chapter  2
Monetization and financial control by the state
ByJie Zhang
Pages 19

This chapter builds a simple model of monetization and the utility function of the state and, based on the model, explains the significant influence of the monetization that was rapidly carried out right after initiation of economic reform in China on the cost-benefit structure of state control over finance and the existing financial institutional arrangements. The financial reform of China can be considered as an institutional response against the changes of gains from monetization and the cost of financial control.