On The Effectiveness Of Moretary Policy In Our Country Under The Background Of The Financial Crisis

Accompanied by development of the monetary economy, the financial crisis are becoming more frequent, and financial crisis's impact to the socio-economic is also becoming stronger. The financial crisis is an economic phenomena which can not be avoided in the era of monetary economic. People always trying to predict and avoid financial crises, but the results are not ideal. The financial crisis always occurred in the world inadvertently, and caused huge damages to the economic order and people's lives. The financial crisis has become a modern economic, social and theoretical circles mystery.Monetary policy is the guideline that the central bank guides the money supply and credit activities, and also is core functions of the central bank. Through various monetary policy tools, the central bank mediates and controls the intermediate objectives, and then has an impact on investment and consumption, finally achieves the ultimate goal. Under the background of the financial crisis, appropriate monetary policy is an important measure of keeping the economy healthy and stable development. Monetary policy includes aspects of the policy objectives, policy instruments and policy transmission mechanism. Adjusting the balance of value and physical movement, channeling savings'transformation to investment, stimulating consumption, promoting socio-economic development are important duties of the monetary policy. Therefore, study on the effectiveness of China's monetary policy under the background of the financial crisis has important practical significance.The article does empirical analysis of the effectiveness of China's monetary policy by macroeconomic data in the period of1997Asian financial crisis and2008financial crisis. In response to the financial crisis, the central bank made expansionary monetary policy, attempting to increase economic and social mobility, and stimulating investment and consumption, to screed economic fluctuations. however, the effects of monetary policy are not obvious. The indicators relevant to the four major objectives of monetary policy remained fluctuated, and the rapid increase in money supply raises concerns about inflation. On the basis of empirical analysis, the article analyzes factors affecting the effectiveness of monetary policy in China from the view of monetary policy system defects, asymmetric mechanism of monetary policy, monetary policy transmission mechanism and channel. The effectiveness of monetary policy is impacted by the economic system and environment. There must be some basic institutional conditions to ensure the monetary policy to be productive. The independence of the People's Bank of China, low degree of development about the market carrier, and weak ablity of coping with the international financial markets changes reduces the effectiveness of monetary policy transmission. Economists generally agree that "the tightening of monetary policy can effectively restrain an overheated economy, but the expansionary monetary policy can do nothing in the governance of economic recession." Asymmetric mechanism of monetary policy shows, in times of financial crisis, commercial banks, businesses and households are pessimistic about the future. The central bank can adopt expansionary monetary policies to stimulate the economy, but can not force people to lending and investing for intent. Only in the improved economic and financial systems, monetary policy intentions can be transimtted effectively, and monetary policy measures can be implemented efficiently, and then Intermediate objectives and ultimate goals of monetary policy can be achieved more easily.The increase of effective money supply will stimulate investment and consumption, and can effectively promote economic growth and employment in the society; Missing Money can not promote economic and social output, but only cause price level to increase. If the monetary policy transmission process is unobstructed, the monetary policy should be implemented efficiently. and microeconomic entities can response to the policy timely. Therefore, there would not be significant differences.on the quantity and time between the nominal money supply and effective money supply.and there would be no deflation phenomenon. In the period of1997Asian financial crisis and2008financial crisis, obstructed monetary policy transmission process is one of the important causes of deflation. There is a significant time lag from the implementation of monetary policy instruments to micro-economic entities feeling the effects, and the velocity of money is going down. Because transmission process of monetary policy is blocked, there are significant differences. on the quantity and time between the nominal money supply and effective money supply.Finally, the article makes recommendations to enhance the independence of the People's Bank, improve the transmission mechanism of monetary policy, deepen the reform of the RMB exchange rate system, dredge monetary policy transmission channels, play a guiding role of the window, and strengthen supervision of international capital flows.