The People's Bank of China's monetary policy control tools are mainly divided into two types.One is a first-class regulatory tool, including interest rate policy and exchange rate policy;The other is a quantitative regulatory tool, in which the statutory reserve ratio, open market, relending and rediscounting are all commonly used quantitative monetary policy tools by the central bank.
In addition, in order to better meet the needs of economic development, China has vigorously carried out exchange rate and interest rate reforms and improved the financial market systemThe People's Bank of China is also constantly introducing new monetary policies to achieve better monetary policy control effects. In China, the regulation and control of the statutory reserve ratio occupies a dominant position in monetary regulation.
Under the reserve deposit system, commercial banks and other financial institutions are required to withdraw certain funds from the total deposits they absorb at the rate set by the People's Bank of China and transfer them to the People's Bank of China. In this way, under the ** banking system, the People's Bank of China can exercise certain control over the amount of China's currency through the statutory deposit reserve ratio.
The statutory reserve system was first implemented by the United States, and in order to protect and facilitate the payment and clearing operations of commercial banks in the early days of the founding of the People's Republic of China, similar regulations were made following the example of the United States. The development and evolution of the deposit reserve system in China is integrated with the national conditionsNowadays, it can not only regulate the amount of currency and social liquidity in China, but also play an indispensable role in promoting China's economic development and stabilizing the operation of financial institutions.
Because China's exchange rate and interest rate regulation mechanism is still not perfect, the financial market is not developed enough and other national conditions, the quantitative regulation represented by the statutory reserve ratio will occupy a leading position in China's monetary policy regulation and control for a long time in the future. Interest rate tools are market-sensitive policy tools, and the People's Bank of China can regulate the financing costs of enterprises while affecting the supply and demand of funds by adjusting the interest rate level and interest rate structure.
The reform of China's interest rate market is to proceed from the opening of interbank lending and repo rates, and gradually open up the interest rates on loans and deposits in foreign currencies on the premise of laying a good domestic foundation. After that, the first bank reformed the loan interest rate of financial institutions and fully relaxed the restrictions on its floating range. Since then, China's leading banks have continuously introduced new monetary policy control tools to promote the reform of the interest rate market, and have repeatedly tried to expand the maximum value of the floating range of deposit interest rates.
The Loan Market** Interest Rate (LPR) is one of the more eye-catching instruments. In 2015, the People's Bank of China decided to no longer impose restrictions on deposit interest rates and fully liberalize them. So far, important achievements have been made in the interest rate reform, and the general idea of interest rate market-oriented reform mentioned by the central bank in the "2002 China Monetary Policy Implementation Report" has been basically completed. Although the proposal of LPR is conducive to the development of China's interest rate market, it also causes the problem of the coexistence of basic interest rate and market interest rate.
To address this issue, the PBOC has decided to allow banks to determine the LPR** by reference to the open market operation rate from August 20, 2019, and to use the loan market** rate as the pricing benchmark in floating rate loan contracts. China's market-oriented reform of interest rates has achieved increasing results, the interest rate transmission mechanism has become more and more smooth, and the effect of first-class regulation and control has been steadily improved. While promoting the liberalization of interest rates, exchange rate reform is also being vigorously promoted.
Over the past few years, China's foreign exchange reserves have been maintained at 3About 1 trillion US dollars, it can be seen that the supply and demand of currency in China's foreign exchange market are relatively stable. Initially, China implemented a system of compulsory settlement and sale of foreign exchange, but after the exchange rate was merged in 1994, it began to implement a single, managed floating exchange rate system based on market supply and demand, and pegging to the trend of the US dollar was the focus of exchange rate management.
After the exchange rate reform in 2005, China's exchange rate system is no longer pegged to the US dollar exchange rate alone, but has turned to refer to a basket of currencies to adjust the exchange rate. **By constantly adjusting the fluctuation range of the RMB exchange rate against the US dollar, the bank gradually amplified the fluctuation range, so that the RMB exchange rate slowly changed to market-oriented adjustment. With the continuous improvement of this exchange rate mechanism, the flexibility of the RMB exchange rate has become increasingly enhanced.
The People's Bank of China has many monetary policies at its disposal, and the central bank can use one or more policy tools to implement monetary policy by adjusting the ultimate policy objectives through different intermediary objectives such as total currency reserves and interest rates. However, according to the research of economists, for a long time before the 2008 financial crisis, the best banks in developed countries did not make effective use of a variety of monetary policy tools.
Economists have found that in the United States, the Federal Reserve mainly uses the federal interest rate to regulate the market. After the research and analysis of the bond market, it is concluded that monetary policy can affect corporate liabilities by adjusting interest rates, so as to regulate the bond market. Monetary policy authorities use a single policy instrument to regulate, and researchers in other developed countries have found similar findings.
In the relevant research literature on the monetary policy of developed countries in Europe and the United States, economists generally choose to use the monetary reserves or money supply of European and American countries as the variable representing the monetary policy impact of quantitative policy, and the variable representing the first monetary policy instrument generally uses the benchmark interest rate such as the federal interest rate. Different from foreign research, in the relevant research literature of China's monetary policy, Chinese scholars have more diversified choices of policy variables.
Money supply M2 or M1 and the statutory reserve ratio are commonly used quantitative monetary policy variables, and the benchmark interest rate of deposits and loans is often used to measure the effectiveness of ** policy regulation. In addition to identifying and proving that these variables can be used as variables representing monetary policy shocks, Chinese scholars also make a comparative analysis of the effectiveness of different policy tools.
Through the comparative study of several variables, it is found that only the use of quantitative policies or ** policies can not well curb China's inflation, and the choice of mixed rules will have a better effect. In the DSGE model, the two variables of credit cost and borrowing income are selected to test the effectiveness of the interest rate rule and the quantity rule, and it is believed that the current quantitative monetary policy is not performing well, and the first-class policy adjustment should be appropriately increased.
Taking into account the future development of the inflation level in our country,This paper studies the two regulatory instruments, and finds that the regulatory effect of monetary instruments is related to the elasticity of monetary demand to interest rates. The three main policy tools of the People's Bank of China were selected, and their effectiveness was evaluated in a comparative analysis, and the performance of the three policy tools was found to be mediocre.
It can be argued that both the statutory reserve ratio and the benchmark deposit and loan interest rate have a small impact on economic output. Considering China's national conditions, it is still in a period of economic transition, and both the interest rate transmission mechanism and the exchange rate transmission mechanism are not perfect, and the comprehensive use of several policy tools is more effective for China's monetary policy authorities to achieve economic growth and curb inflation.
Under the situation of continuous promotion of interest rate liberalization, it is proposed to coordinate the use of the two monetary policies under the empirical research, and only by rational combination can the maximum effect. With comprehensive reference to relevant Chinese and foreign literatures and China's national conditions, this paper selects the statutory reserve ratio as the representative of quantitative monetary policy tools, and the real effective exchange rate index and the benchmark interest rate used by banks to influence corporate lending behavior and investment consumption behavior as the representative of the first-class monetary policy tool.
Although both the first-class monetary policy and the quantitative monetary policy can regulate the market, their transmission mechanisms are different because of their different frameworks or goals, which makes it difficult to take both into account in practice. According to the theory of financial development, the liberalization of interest rate control and the promotion of the marketization process of interest rates and exchange rates are conducive to promoting the economic development of a country.
Through this deepening financial reform, it is convenient for the first bank to participate in market activities, and the central bank can influence the benchmark interest rate level through transactions, and ultimately achieve the purpose of regulating the real economy. In recent years, quantitative monetary policy regulation has played an important role in stabilizing China's economic marketHowever, with the development of financial innovation and the promotion of market-oriented reform of interest rates and exchange rates, it is difficult to meet the needs of China's policy regulation and control by relying only on quantitative monetary policy regulation.
Affected by the external environment, the stability of the currency multiplier and currency demand is difficult to control, which leads to the gradual weakening of the effectiveness of quantitative monetary policy control. Since 2018, China will no longer announce the quantitative targets of money supply and social financing, which is in line with China's new development concept of diluting the GDP growth target and focusing on the quality and efficiency of growth, and it can also be seen that China's determination to regulate and control the transformation of monetary policy.
The conceptual interpretation of the monetary policy framework in monetary economics includes three parts: policy objectives, transmission mechanisms and policy tools. Therefore, the change in the mode of monetary policy regulation can also be regarded as a change in China's monetary policy framework. In an empirical test based on actual data,Most economists have found that quantitative regulation is better than first-class regulation, but with the improvement of the transmission mechanism in various countries, the advantages of quantitative regulation are getting weaker and weaker.
The conceptual interpretation of the monetary policy framework in monetary economics includes three parts: policy objectives, transmission mechanisms and policy tools. Therefore, the change in the mode of monetary policy regulation can also be regarded as a change in China's monetary policy framework. In an empirical test based on actual data,Most economists have found that quantitative regulation is better than first-class regulation, but with the improvement of the transmission mechanism in various countries, the advantages of quantitative regulation are getting weaker and weaker.
According to the actual experience of major emerging markets and countries in transition, due to the underdevelopment of the financial market, the monetary policy framework that has been directly transformed into a first-class regulation and control of the macroeconomy is not strong, which shows that the transformation of the monetary policy framework cannot be achieved overnight. During the period of economic transition, it is necessary to properly measure the comparative advantages of "quantity" and "price", coordinate with each other, and carry out mixed monetary policy regulation and control.
China's monetary policy authorities can use monetary quantitative tools to smooth out fluctuations when the economy fluctuates greatly, and use the characteristics of first-class tools to regulate and reduce the loss of social welfare. In the "13th Five-Year Plan", China has clearly proposed to "build a target interest rate and interest rate corridor mechanism, and promote the transformation of monetary policy from quantitative to first-class".
The choice of quantitative regulation and ** regulation is also the choice of monetary policy between the two objectives of the quantity of money and **, that is, the trade-off between the tolerable inflation rate and economic growth. If a country's shocks are mainly from demand and commodity markets, it is better to regulate by choosing the currency as the target, but this requires enduring fluctuations in interest rates.
If the shock comes from the money market, interest rates are a better policy target, but this will sacrifice the stability of monetary volumes. With the continuous advancement of global financial liberalization, the ultimate goal of monetary policy has gradually evolved from stable economic growth to stability, and then from stability to systemic risk.
During the economic depression, moderate easing policies can effectively stimulate the continuous increase in output, such as the 2008 financial crisis, China is to achieve the effect of stabilizing the economy by anchoring a single economic growth target. However, banks choosing to anchor to a single target can reduce losses due to inflation and maximize social welfare.
Therefore, during the economic boom, countries will mostly choose to aim for stability, but excessive attention to the inflation rate is easy to ignore assets and financial stability, leading to the occurrence of the "gray rhinoceros" event. By the time the asset bubble has expanded to a certain extent, it is already too late to take remedial measures after the fact.
The lessons learned from the 2008 international financial crisis have made developed countries aware of the importance of macroprudential policies, and central banks are now adding macroprudential factors to their monetary policy frameworks to achieve the goal of financial stability of monetary policy. China has also integrated the monetary policy framework with the macroprudential policy framework, especially in the areas of macroprudential assessment and cross-border capital flows.
The goal of monetary policy is no longer to focus solely on quantity or **, but to shift to a new model that takes into account financial stability. In recent years, China has adhered to supply-side reform and continuously promoted scientific and technological innovation, and the stability and coordination of China's economy have gradually increased. In the case of increasing uncertainty in the external economic environment, the central bank has stabilized China's economic growth by reducing the statutory reserve ratio several times.
The goal of monetary policy is no longer to focus solely on quantity or **, but to shift to a new model that takes into account financial stability. In recent years, China has adhered to supply-side reform and continuously promoted scientific and technological innovation, and the stability and coordination of China's economy have gradually increased. In the case of increasing uncertainty in the external economic environment, the central bank has stabilized China's economic growth by reducing the statutory reserve ratio several times.
And release good information to stabilize social expectations, which shows that quantitative monetary policy regulation plays an important role in stabilizing China's economy. At the same time, with the initial construction of the interest rate corridor and the construction of the economic channel of the "Belt and Road", the transmission mechanism of interest rates and exchange rates has gradually strengthened, and their ability to regulate and control market expectations has been improved.
In the context of the acceleration of the global economic cycle and the increasingly complex external economic environment, a single headwind direction regulation or a single simple rule cannot meet the needs of macroeconomic regulation and control. China's economic development has entered a stage of high-quality growth, and it is no longer focusing on the speed of development but advocating the quality of development.
Although the controllability and stability of the currency volume have declined, quantitative regulation is still an important means of regulation and control. China's financial market has not yet been perfected, the interest rate transmission mechanism and the exchange rate transmission mechanism have not been completely dredged, and the monetary authorities need to be soberly aware that the transformation of monetary policy regulation and control mode needs to be gradual and cannot be achieved overnight.
According to the requirements of the "13th Five-Year Plan", it is necessary to firmly guard against systemic financial risks, and strive to promote the reform of exchange rates and interest rates under the premise of ensuring economic and financial stability, improve China's market mechanism, and reasonably give full play to the "comparative advantages" of quantitative and first-class tools.