Monetary Policy Transmission Mechanism

Monetary policy transmission mechanism is an important and forward question about which is being discussed around the world. Yhat is called the monetary policy transmission mechanism, in brief, is the channel and mechanism by which the central bank adopted monetary policy instruments to affect economy .No doubt, the studying of this question has very important practical significance in the background of epicycle monetary policy having lower effect. This thesis started with the logical analysis of the origin and development of money and deemed that money originated from the functional needs of the development of economy promoted by the divide in the work. Money can meet the needs of the economy in that its ubiquitous identification in society,namely the credibility of the money. Therefore, the process that the money exerts its function is the process in which the credit plays. The unification of the money and the credit is the finance. Hence, the process of the money exerting function based on its credibility is the process of the finance playing. Because of the development of the money containing the development of the credit, the development is the unification of the development of the money and the credit. The assurance of the credit and the money were separated with the development of the economy and the extending of the market, but the money?s inherent needs for the assurance of the credit requires its synchronizing development with the differentiation of the money. Thereout, the differentiation of the money coming into one part o~?the finance deepen, viz, the undercurrent finance deepen, the status of the differentiation of the money coming into the undercurrent finance; and the development of the credit coming into another part of the finance deepen, viz, the formal finance deepen, the status of the development of the credit mechanism (institutions, organization, instrument),which guarantee different moneys exerting function, coming into the formal finance. In order to meet the monetary functional needs of the economy, the continuous development of the finance coming into being the contradictory movement of the undercurrent and the formal finance. The inharmonious in the development of the money and the credit, which resulted from the continuous development of the economy, resulted in the inharmonious in development of the undercurrent finance and the formal finance and the inharmonious in the development of the finance and the economy consequently. The need of making up the inharmonious disfigurement has being the inherent logic of the coming and development of the governmental finance and the monetary policy. The process in which the monetary policy plays its role, is the government choosing the instruments based on the formal finance to control special money in the undercurrent finance. That?s the transmission of the monetary policy. The instruments and the controlled money are composed of the monetary policy transmission mechanism. After having analyzed the coming, development and the complex connections of the money, the credit, the finance and the monetary policy etc. logically, we put forward the conclusion definitely as follows: in a phase of the development of the economy, the validity of the monetary policy rests on the given transmission mechanism, which rest with the rationality of the given finance deepen. Apart from the effect of the unanticipated factors and the misplay of the monetary policy, the cause of the invalidity or low invalidity of the monetary policy in a phase...