| Before the 2008 Financial Crisis,the responsibility of the monetary policy authorities was to maintain macroeconomic stability.The four major goals of the monetary policy in traditional macroeconomics theory were economic growth stability,price level stability,full employment and payments balance.After practice and demonstration,most economists and monetary policy authorities in most countries have considered the price level stability as the primary goal of monetary policy.Moreover,the central banks in most countries agree that the objectives of monetary policy are internally consistent with the objectives of financial stability.As a result,the goal of monetary policy can be achieved while the target of monetary policy is realized.However,in 2008,the outbreak of the Financial Crisis revealed the shortcomings of the traditional financial supervision mode,which made the academic circles,the practical circles and the financial supervision departments have to reflect on the comprehensiveness and rationality of the traditional monetary policy target system.When extreme instability,especially the market bubble,occurs in the financial system,the traditional framework of monetary policy cannot effectively identify the risks of macro economy,and also cannot develop effective monetary policy to prevent financial instability transmitting to the real economy.After the Financial Crisis,the concept of“Macro-Prudential Policy”has gradually been known by the economists,financial practitioners,financial supervision departments and international organizations.In order to maintain financial stability and prevent the outbreak of systemic financial risk,the governments and the financial supervision departments in many countries in the world have begun to put the macro-prudential policy from theoretical research into the supervision practice,which has also become a focus issue of research in the field of financial supervision.At the beginning of 2009,the Bank of International Settlements?BIS?defined the macro-prudential policy,which emphasized that we should solve the problem of"too big to fail",procyclicality,insufficient supervision and low standard by macro-prudential policy.At the G20 Summit in November 2010,all members agreed on the definition of macro-prudential policy,which mainly refers to the policy of using prudential regulatory tools to prevent the outbreak of systemic financial risks so as to avoid the impact to the real economy.On December 16th,2010,the Basel III Accord was introduced,in which the main change is to make up for the shortcomings of micro-prudential supervision of Basel I Accord and Basel II Accord,and emphasize the importance of macro-prudential policy.In practice,the major countries in the world have begun to establish macro-prudential policy institutions and regulatory frameworks,for example,The Financial Stability Oversight Council?FSOC?was set up in the United States,the Financial Policy Committee?FPC?was set up under the control of Bank of England,The European Systemic Risk Board?ESRB?was established for financial stability,and the Financial System Management Committee?FSMC?was also established in Japan.Many countries,especially developed economies,in the world have initially formed macro-prudential policy tool systems and governance frameworks,which are mostly dominated by Central Bank.China has started put the macro-prudential policy into practice long before the Financial Crisis,policies such as window guidance and real estate credit policy have already had the embryonic form of the macro-prudential policy.The continuous improvements on the quantitative monetary policy and price-based monetary policy framework also contain the consideration of the macro-prudential policy.After the outbreak of 2008 Financial Crisis,based on the relevant arrangements and decisions of the Central Government and the State Council,combined with the lessons on the Financial Crisis learned by the G20 and FSB,the People's Bank of China has carried out comprehensive and thorough exploration in the construction of the macro-prudential policy framework in China.Since the middle of 2009,macro-prudential policy measures have been studied by the People's Bank of China,and the Dynamic Differential Reserve Adjustment Mechanism was formally introduced in 2011,which has been implemented for six years,coordinating with monetary policy tools such as Interest Rate,Open-market Operation and Deposit Reserve Ratio,which has effectively promoted the steady growth of monetary credit and enhanced the robustness of financial institutions.In 2012,the National Financial Work Conference considered the systemic financial risk prevention system as one of the ten topics,and emphasized the importance of establishing macro-prudential supervision regulation,which pointed out the direction of the financial regulation reform at the aspect of financial system reform."The 12th Five-Year Plan"in China and the"12th Five-Year Plan on the Development and Reform of the Financial Industry"promulgated by the State Council clearly put forward"Build the Countercyclical Macro-Prudential Management Framework"and"Establish Finance Macro-Prudential Policy Framework"respectively.At the beginning of2016,"the 13th Five-Year Plan”again made it clear that"the next 5 years,our country should strengthen the macro-prudential financial management system construction,reform and improve the financial regulatory framework to adapt to the modern financial market development".The macro-prudential policy reform has become the focus of the financial industry reform in China.With the development of the economic situation and the financial industry,the People's Bank has constantly improved its policy framework.In 2016,the People's Bank upgraded the Dynamic Differential Reserve Adjustment Mechanism to the Macro-Prudential Assessment?MPA?,with which the People's Bank regulate and guide financial institutions at the terms of Capital,Leverage,Assets,Liabilities,Liquidity,Pricing Behaviors,Asset Quality,Cross-Border Financing Risk,Credit Policies Implementation.In addition,in May 2016,the macro-prudential management on cross-border financing was extended to apply to nationwide financial institutions and enterprises,cyclically adjusted the cross-border financing to control leverage and currency mismatch risk.The macro-prudential supervision policy in China is constantly improving.In March 2017,the People's Bank of China put forward the"Monetary Policy+Macro-Prudential Policy"Two-Pillar-Policy-Framework,and actively explored the coordination between the monetary policy and macro-prudential policy.At the National Financial Work Conference in 2017,the importance and urgency of macro-prudential supervision was emphasized again,and the Financial Stability and Development Commission of the State Council was established,which strengthens the PBC's responsibilities on macro-prudential management and systemic risk prevention in the terms of organizational structure and duty division,which increases the authority of financial regulatory coordination mechanism,further improves the efficiency of supervision and co-ordination.This indicates that under the leadership of the Financial Stability and Development Commission of the State Council,the macro-prudential policy framework led by the People's Bank of China has been formally established.Thus,the coordination of the monetary policy and macro-prudential policy has also become an important subject in the China's financial supervision reform.Further,the report of the 19th CPC National Congress clearly emphasized,"Improve Monetary Policy+Macro-Prudential Policy Two-Pillar-Policy-Framework",from which we can see that improving the macro-prudential policy framework,which coordinates with monetary policy,to maintain currency stability and financial stability is not only the important mission of financial supervision department,but also is crucial for the efficiency of China's economic strategic transformation.Therefore,the introduction and practice of countercyclical macro-prudential policy has a far-reaching impact on China's financial stability.In financial structure dominated by commercial banks,is there pro-cyclical nature in the financial system of China?Does decision-making and implementation of China's monetary policy have an impact on financial stability?In particular,what impact will the monetary policy have on the stability of the banking industry in China?If there is an impact,is it a positive effect or a negative impact?Is the macro-prudential policy in China effective in the continuous improvement process?What kind of coordination should be established between macro-prudential policy and monetary policy?Especially when different types of shocks occur,what kind of coordination should be established between macro-prudential policy and monetary policy?Is it the fixed coordination mode or the"discretionary"coordination mode?The related research has important theoretical and practical significance for the realization of dual goals of price level stability and financial stability in China,and provides some support for policy making.Based on the background of economic transformation and financial system reform in China,this paper systematically combs out the experience of establishing and improving the macro-prudential policy framework in major countries in the world,summarizes and analyzes the differences between three coordination modes.Subsequently,the paper summarizes the experience of establishing and improving the macro-prudential policy in China,analyzes the development direction and objectives of the coordination between monetary policy and macro-prudential policy in China.Finally,the research focuses on the coordination mode between monetary policy and macro-prudential policy,especially the policy effects of different coordination mode when different kinds of shocks occur,and choose the optimal coordination mode between monetary policy and macro-prudential policy.After the the eight chapters of the analysis and research,this paper concludes 3 main conclusions:Firstly,the accession of macro-prudential policy helps to achieve the realization of monetary policy objectives and macro-prudential policy objectives,and macro-prudential policy is effective in policy.Faced with different types of shocks and the adoption of macro-prudential policy tools,the fluctuation of inflation has been suppressed,and the fluctuation of financial stability indicators such as real estate asset prices and Commercial Bank leverage has also been stabilized.It shows the necessity of coordination between monetary policy and macro-prudential policy.Secondly,under different types of shocks,different macro-prudential policy tools have different effects on impact.In the face of technological shocks and real estate demand shocks,Pigou tax is more effective,and monetary policy goals and macro-prudential policy objectives can be achieved sooner and more steadily.Under the shock of capital,LTV is more effective.However,under the shocks of monetary policy,it is hard to tell which is better.Therefore,different macro prudential policies have different effects on different shocks.Lastly,combined with the policy loss function and game theory,through the empirical test,the cooperation mode,namely the"Complete Dominant"monetary policy and macro-prudential policy coordination mode is at most conditions the best coordination mode.The empirical results show that under all kinds of shocks but one,the non-cooperative policy combination is the most unfavorable policy combination,and the cooperation mode,namely the"Complete Dominant"monetary policy and the macro-prudential policy coordination mode is the best coordination mode.Finally,based on the above analysis and conclusion,this paper puts forward three policy implications.Firstly,we should strengthen the innovation of macro-prudential policy tools and constantly improve the macro Prudential policy toolbox.Secondly,we should continue to promote and improve the"double-pillar"policy framework dominated by the People's Bank of China.Thirdly,we should strengthen the foresight of identifying and judging the risk impact so as to facilitate the implementation of macro Prudential policy tools. |
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