Regarding the blind spots in monetary basic knowledge that my brothers asked about, I recommend a book called "Monetary Finance" and summarize the key points of the provincial circulation version for my brothers. 01. Currency and Monetary System The essence and function of currency Essence: General equivalent, medium of exchange for goods. Functions: Value scale, means of circulation, means of payment, means of storage, world currency. Evolution of Currency Full value currency → representational currency → credit currency → electronic currency. Evolution of Payment System: Commodity Currency → Non cash Currency → Cheque → Electronic Payment. Monetary hierarchy (China) M0: Cash in circulation M1: M0+unit current deposit M2: M1+fixed deposits from employers+savings deposits from residents M3: M2+high liquidity securities (such as financial bonds, commercial paper) monetary system Content: Currency materials, currency units, primary and secondary currencies, issuance method (primary currency free minting/secondary currency national minting), legal solvency (unlimited/limited legal solvency). Evolution: Silver Standard → Gold Silver Composite Standard → Gold Standard (Gold Coins/Nuggets/Gold Exchange) → Credit Currency System. 02. Money Supply and Demand and Equilibrium Monetary supply regulation The central bank regulates the base currency (open market operations, rediscounting, etc.) and the money multiplier (reserve requirement ratio). Commercial banks affect the money supply through excess reserves and loan size. Money demand theory Fisher's equation (MV=PT): emphasizes the function of a trading medium. Cambridge equation (Md=kPY): analysis from an asset perspective. Keynesian theory: trading motivation, precautionary motivation, speculative motivation. Friedman's theory: Money demand is influenced by persistent income and opportunity cost variables. Monetary equilibrium and non-equilibrium Equilibrium indicators: stable prices, balanced supply and demand of goods, and balanced interest rates. inflation: Causes: Demand pull up, cost push, structural factors. Countermeasures: Tightening policies and income indexing. Deflation: expansionary policy governance. 03. Credit and interest rates Credit form Commercial credit, bank credit, national credit, consumer credit, international credit. Interest rate determination theory Classical theory: Interest rates are determined by savings and investment. Keynesian theory: Interest rates are determined by money supply and demand (liquidity preference). Theory of loanable funds: comprehensive savings, investment, and money supply and demand. Interest rate risk and term structure Risk structure: default risk, liquidity, tax impact on interest rate differences. Term structure theory: expectancy theory, market segmentation theory, liquidity premium theory. 04. Financial System and Market Classification of Financial Markets Money market (short-term): interbank lending, bill discounting, treasury bonds. Capital markets (long-term): stocks, bonds, medium - to long-term credit. Derivatives market: Futures, options, swaps (used for risk management). financial institution Banking category: central bank, commercial bank, policy bank. Non bank categories: securities, insurance, trusts, funds. Financial function Resource allocation, risk transfer, payment settlement, and information provision. Commercial banks and central banks Functions of commercial banks Credit intermediary, payment intermediary, credit creation, financial services. Business: Liability business (deposits), asset business (loans), intermediary business (risk-free), off balance sheet business (contingent risk). Functions of the Central Bank The issuing bank, the bank of the bank (the lender of last resort), and the national bank (acting as the national treasury). Monetary policy tools: reserve requirements, rediscounting, and open market operations. 05. International Finance Exchange rate and system Pricing method: direct (1 USD=6 RMB), indirect (1 RMB=0.16 USD). Exchange rate determination theory: purchasing power parity, interest rate parity, balance of payments theory. balance of payments Accounts: Current Account (Trade), Capital and Financial Account (Investment), Reserve Assets. Imbalance adjustment: exchange rate adjustment, monetary policy, fiscal policy. international reserve Foreign exchange reserves (mainly), gold, SDR (Special Drawing Rights). 06. Financial Regulation and Policies basel accord Core: Capital adequacy ratio ≥ 8% (core capital ≥ 4%). Three pillars: minimum capital requirements, regulatory review, and market discipline. monetary policy objectives Stable prices, full employment, economic growth, and balance of international payments. Transmission mechanism: interest rate channel (Keynes), money supply channel (Friedman). Financial Innovation and Risk Motivation: Avoiding regulation, technological progress, risk management. Risk types: credit risk, market risk, operational risk. Summary of core logic: Currency is the lifeblood of economic activity, and resource allocation is achieved through the financial system (market+institutions). The central bank regulates the economy through monetary policy. International finance involves exchange rates and capital flows, and regulation ensures system stability. It is necessary for brothers in the cryptocurrency circle/US stock investment to understand these logics. 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