Macro-liquidity Management:a Substitution To Monetary Policy

For financial assets playing more important role in financial system and the relationship between monetary assets, output and inflation is no longer stable, the traditional monetary policy is facing many difficulties. In order to solve the above problems, this paper puts forward macro-liquidity theory which bring monetary assets and financial assets into a uniform analysis system and as the basis for futher construction of the macro-liquidity management policy.Macro-liquidity has the connotation of finding a stable relationship between the variables in the financial system and output, and by monitoring and regulation to achieve the goal of regulating the macroeconomic performance. By analyzing the funds flow of the economic performance, shows that the funds flow in financing process correspond with output on the one hand, on the other hand the formation of financial assets and liabilities correspond with the level of credit expansion. Owing to the level of credit expansion as a financial variable satisfies testability, controllability and related requirements, truly reflect the connotation of the macro-liquidity.The demand function of the macro-liquidity and utility functions constructed a general equilibrium, using which to analyze the impact of macro-liquidity on output and inflation. The transmission mechanism of macro-liquidity includes inflation transmission mechanism, asset price transmission mechanism and total factor productivity transmission mechanism. In general, the macro-liquidity impact on the economy performance by both quantity and price.From the four sectors of the economy as a whole to analyze the definition of the macro-liquidity, respectively, non-financial private sectors, financial sectors, government sectors and foreign sectors. Macro-liquidity for non-financial private sectors is defined as the total social financing, Macro-liquidity for financial sectors is defined as the product of total assets of financial institutions and the output coefficients, Macro-liquidity for government sectors is defined as net amount of the financing of the government sectors, Macro-liquidity for foreign sectors is defined as the changes in the amount of net international investment. The above four sectors macro-liquidity sum constitutes the total macro-liquidity.According to the analysis of China's total macro-liquidity and sectoral macro-liquidity shows the stable relationship between the macro-liquidity indicators and the total output as well as sectoral output. Therefore, not only by monitoring the regulation of total macro-liquidity to regulate the whole economy performance, but also through monitoring, regulation of the sectoral macro-liquidity to regulate the economic performance of the various sectors.Macro-liquidity indicators can be divided into two types of quantitative and price type. To quantitative indicators, the total macro-liquidity and sectoral macro-liquidity indicators should be selected as the intermediate target, and the macro-liquidity for financial sectors should be selected as indicators for monitoring. To price indicators, the benchmark interest rate should be chosen as the intermediate target, and the short-term and long-term bond spreads, corporate bonds and bond spreads, and other types of financial market risk spreads indicators should be selected as indicators for monitoring. Simultaneously should create the corresponding policy tools to build the macro-liquidity management framework.