A Research Of The Treasury Fund's Impact On The Monetary Policy Effectiveness

With the deep reform of the fiscal institution in China recently, the treasury fund has upsoared and exceeded one hundred billion yuan. As a result, there were great return lossess of the treasury idle fund. On the other hand, the treasury fund had greatly impact on the monetary effectiveness. If we wanted to solve the two problems outlined above, we should answer the problem that which mechanism influenced the monetary policy. We will intended to do some research on this topic in this paper.Firstly, we discussed the transition of the treasury management system on the basis of literature review. We analyzed the category of the treasury management system and found that the current treasury management system was imperfect. So we brought forward a new kind of the treasury management system with the name of the mixed treasury management system. We could explain the treasury management system in all nations more accurately incorporating the new kind of the treasury management system. But most important of all, the new treasury management system helped to create a prefect institutional environment for our research.Secondly, we did research on the topic about the treasury fund influencing the effectiveness of the monetary policy in theory between the fourth chapter and the sixth chapter. As far as the single treasury management system was concerned, we found that the treasury fund had most strong effect on the effectiveness of the monetary policy. We analyzed this case in the extended exogenous money supply model and found that the treasury fund was inverse proportion to the money supply too. On the other hand, we analyzed this case in the extended endogenous money supply model and found that the treasury fund will influence the asset structure of the commercial banks. In the end, the treasury fund will affect the reserve requirement of the commercial banks and change the equilibrium rate.When it comes to the depository system, the treasury fund did not influence the money supply directly as the single treasury system. We lucubrated this system and found that the treasury fund would have impact on the asset of the people and the enterprises. In the end, the structure of the balance sheet in the commercial banks would be changed due to the treasury funds in the depository system. In the end, the treasury fund would influence the monetary transmission mechanism. On the other hand, the treasury fund in the depository system was easy to be affected by the interest groups and the stability of the bank system would be affected in the end. We lucubrated in the model and found that the treasury funds would also have effect on the mortgage bonds and the liquidity of the commercial banks. As far as the mixed treasury management system was concerned, we found that this system took the advantage of the other two systems. And many developed countries today adopted this system. The mixed treasury management system has become the best system today.Thirdly, we did positive research with the monthly data in China. We analyzed the data with dynamic econometric tools such as co-integration and impulse response, etc. And we found some important results. To begin with, the treasury fund in China has co-integration relationship with the monetary base and the interest rate. The treasury fund was Granger cause of the monetary base and the interest rate. We also found that the monetary base was strongly affected by the treasury fund. Secondly, The treasury fund had co-integration relationship with all kinds level of the money supply such as M0, M1 and M2. The treasury fund was Granger cause of the money supply. The treasury fund had most strong effect on M0 and least effect on M2. Lastly, we found that the treasury fund had co-integration relationship with the financial loans and the financial reserves. The positive impulse of the treasury fund will cause the financial loans to change negatively. The treasury fund was Granger cause of the financial loans and the financial reserves. To sum up, we found the important result that the treasury fund in China had notable effect on the effectiveness of the monetary policy.Finally, we analyzed the problem on how to smooth the effect that the treasury fund had on the monetary policy. In accordance with the situation in China, We found that the best way to cope with this problem was to push reform in the treasury management system in China. And we analyzed the core issues with the treasury management system reform. Namely, we modelled and measured the best level of the treasury fund in China. Secondly, we analyzed the problem that how to invest the idle treasury fund. Lastly, we analyzed and assessed the institution about financing the treasury deficit and smoothed the treasury fund. Anyway, if we wanted to smooth the influence on the effectiveness of the monetary policy, we also must resort to the cooperation between the central bank and the fiscal bureau.