Effectiveness Of China's Currency Liquidity Management And The Use Of Management Tools

At present, the management of monetary liquidity has become a core issue in China's financial macro-control. In the environment of economic globalization, China's currency liquidity management should comply with the requirements of economic development, assets price and economic cycle. From the using perspective of the Chinese monetary liquidity management tools, it should be considered not only the efficiency of the monetary management control, but also reflect the requirements of the ultimate goal of monetary policy, and consider the forward-looking and problems of coordinated operation with the international financial. However, China's currency liquidity management faces increasing challenges and pressures, uncertainty is growing, especially how to effectively manage and regulate the huge amount of currency liquidity become the important issue demanding prompt solution in the process of China's currency liquidity management.Under the guidance of modern monetary and financial theories, this paper chooses the situation of China's currency liquidity as the research object, using theoretical analysis, empirical analysis, comparative analysis and other methods to explore how to enhance the liquidity management and the use of management tools, and expanding the space of existing research theory and the empirical research, which have certain theoretical and practical significance.This paper studies "strengthening effectiveness of China's currency liquidity management and the use of management tools" as the main line, and is divided into six chapters to start discussion:The first chapter is an introduction, focusing on the purpose and significance of the research. While, shows an overview, contents and framework on this research in domestic and international, and then proposes the innovation of this paper.Chapterâ…¡is the basic concepts and theory support part. Mainly studies the concept and theories of currency liquidity and its management effectiveness on the base of clarifying the meaning of liquidity.Chapterâ…¢analyses the scale and structure of China's currency liquidity. First give a historical review to the process of China's currency liquidity management, then analyses the reasons of the huge amount currency liquidity in China and situations of the global liquidity, and summarizes characteristics of currency liquidity in major developed countries.Chapter IV is the analysis of China currency liquidity management effect. Empirically analyzes the relationship between China currency liquidity, asset prices, economic growth and the economy cycle. Gives a detailed analysis of each VaRiable by the VAR model, includes currency indicators, total loans of financial institutions liquidity, CPI on behalf of inflation, stock market and real estate price on behalf of asset prices and other VaRiables, identifying the correlation between each VaRiable and the Granger causality. Analyses show that asset price index has a two-way causal with the total loans of financial institutions and M1; the scales of the money supply and credit have great relevance with the asset price like stock market and real estate price. So giving close watch and controlling the multiple intermediate target of monetary policy and discretionarily controlling the supply of liquidity may well be a rational choice of China central bank at this stage.The fifth chapter analyzes the effectiveness of China's liquidity management tools, including the open market operations, required reserve interest and rate policy etc.Chapter VI is about the realistic choices of China's currency liquidity management and control. For the current problems of China's currency liquidity management, discusses constructing indicator of the total scale of the social financing, and put forward policy recommendations. It is mainly about strengthening the role the PBC as the monetary authority plays in the currency liquidity management, establishing the liquidity management mode that both M2 and the total scale of the social financing social are important, and accelerating the framework of counter-cyclical macro-prudential management.This paper develops analysis from the coordinated development of the economic, focusing on the effect and tool usage of Chinese currency liquidity management, and draws a conclusion that the range of Chinese monetary liquidity management is still relatively narrow and the effectiveness of monetary liquidity management tool should be further improved. Therefore, the range of Chinese monetary liquidity management should be broadened, and the total scale of social financing should be supervised and regulated, constantly perfecting Chinese currency liquidity management target system and operation mechanism.