Abstract: This paper uses the macro-financial data from 2000 to 2019 to calculate the circulation velocity and money multiplier of China's currency, compares it with the data before 2002, analyzes the effectiveness of the money supply as the intermediary target of monetary policy and the difference in the role of three different money supply layers, and analyzes the economic principles behind them. The research finds that, as an intermediary target of money, the money supply is still effective on economic growth and price level. Among them, the stable growth of narrow money M1 has a significant long-term tendency to improve GDP growth. M0 and the central bank's capital investment have a direct impact on the consumer price index. The impact of broad money M2 on asset prices has not been reflected in the inflation measurement system.
