Selection, Application And Effectiveness Analysis Of Monetary Policy Tools

Monetary policy tools are the basic intermedia of monetary policy transmission and the policy means implemented by the central bank to achieve monetary policy objectives.The global financial crisis has undergone profound changes in the monetary policy framework and policy instruments.Rediscount,reserve requirement,open market operation,interest rate,credit control,window guidance and other policy instruments can not cope with crisis and promote economic recovery.Liquidity support tools,urgent capital injection,nationalization,quantitative easing policies,zero interest rate,negative interest rate,forward-looking guidance and reversal operation as well as currency swap and other innovative policy tools emerge after the crisis,and the new instruments have played a differential role in liquidity supplement,crisis response and economic recovery.Now monetary policy tools can be roughly divided into conventional tools and unconventional tools.The former mainly includes former general tools and selective tools,while the latter is the innovation of policy tools in major economies since the global financial crisis.Unconventional monetary policy aims to deal with the issue of currency transmission with the lower limit of "zero interest rate" and promote the release of credit by financial intermediaries.After the global financial crisis,major policy innovation and tool matching have been carried out in the United States and the Euro area.Liquidity support,zero interest rate,quantitative easing and structural asset purchase plans are the common tool choices of the two monetary authorities.In terms of liquidity crisis response and final lender function fulfillment,the Federal Reserve and the European Central Bank have played a positive role in innovative policy tools.However,in terms of economic recovery,the effectiveness of the policy instruments of the Federal Reserve and the European Central Bank is clearly divided.China has also implemented major monetary policy framework reform and innovation,and is gradually moving towards a "multi-objectives and multi-tools" policy framework.Currency issuance had been dominated by foreign exchange occupation but now is relying on facility tools.Diversified facilities have played an increasingly important role in China's monetary policy system.The effectiveness of monetary policy tools needs to focus on the effectiveness of policy transmission in money market and credit market.In the investigation of theeffectiveness of the new structural policy instruments represented by variable instruments,the scale and interest rate of the new facility instruments play a differential function in the transmission of money market.Generally speaking,the facility instruments are more price-based policy tools,which bring substantial support to the transformation of monetary policy system from a quantitative system to a price-based framework.Especially the price transmission is effective;In fact,there are differences between different facility tools' volumes and price conduction effects.However,in the transmission of credit market,after considering the financing structure and financing premium of off-balance sheet credit,the transmission effect of market interest rate like SHIBOR change in the real economy has not been supported by empirical research.When it comes to the strengthening of financial regulation and the structure of fixed asset investment after 2016,the transmission effect of market interest rate in the credit market or real economy began to appear,and it was more evident in the field of infrastructure investment.But the real estate investment was not very sensitive to the change of market interest rate,financing structure and financing premium.The performance of monetary policy framework with money supply as the intermediate target has been weakened after the facility tools have become the leading force of money supply.The quantitative policy framework has been transformed into the price-based policy framework or it is a major trend.However,there are some constraints such as the vacancy of intermediate target tool,the unsmooth transmission mechanism and the diversification of central bank functions.In the future,the construction of a price-based monetary policy framework and the matching of innovative policy tools are still a long way to go.In the process of moving towards a "multi-objective,multi-tool" policy framework,A two-pillar system of monetary policy and macro-prudential regulation is a better choice,which can effectively ease the contradiction between the matching of multi-target instruments and the effectiveness of some instruments.