Research On The Transition Of China's Monetary Policy Intermediate Target In New Era

As socialism with Chinese characteristics has entered a new era,structural changes have taken place in economic and social development.In the financial sector,the channels of money creation and the level of financial deepening in the new era have changed significantly,and financial innovations have emerged in an endless stream.The same time,at the historic juncture to achieve the "first hundred years" target,China's downward pressure on the economy continues to increase,risks at home and abroad have risen significantly,and the situation has become more complex and severe.Monetary policy needs to play a better role of countercyclical regulation.In this context,analyzing and solving the problem of intermediary target transformation of monetary policy will help to improve the forward-looking,targeted,and effectiveness of monetary policy regulation.Starting from the characteristics of the new era,this paper follows the general research thinking of "theoretical basis--literature review--realistic basis--theoretical simulation--empirical research--policy analysis",using a combination of theoretical and realistic foundations,theoretical simulation and empirical methodological framework combining research and normative analysis,combining total analysis with structural analysis,academic analysis and policy research,comprehensive use of theoretical and literature induction methods,NK-DSGE model,SV-TVP-VAR model,Markov regime switching model systematically studies the problem of the target volume and price transition of China 's monetary policy intermediary,and extends to the discussion of interest rate marketization reform,interest rate consolidation,and other economic and institutional reforms.The main research contents and conclusions are as follows:First,theoretical and literature studies show that,at the present stage,the socialist market economy system with Chinese characteristics is constantly being improved,but there are still many institutional and structural issues that affect the effectiveness of monetary policy regulation,such as the "dual-track interest rates " issue,which makes the amount of intermediate targets for monetary policy.The issue of price transition has become more complicated,and western experience cannot be copied.Existing studies have rarely discussed the deep structural and institutional factors exhibited by developing economies,and they are also lacking in building models adapted to the characteristics of the socialist market economy with Chinese characteristics in the new era.The formation mechanism of China's "dual-track interest rates " and the deep-level institutional reform to promote the marketization of interest rates have received less attention,so further research is needed.Second,domestic and foreign practice research shows that,the monetary policies of advanced economies were not based on price in the first place,and the formation of developed interest rate systems did not happen overnight.The problem of the target volume and price transition of monetary policy intermediaries also existed in history.The differences in the transmission mechanism of monetary policy and the choice of intermediary targets between developed countries and China reflect the institutional factors and the different stages of economic and financial development.The monetary policies of the United States,Japan,the Eurozone and the United Kingdom are all typical price-based monetary policies.The intermediary targets are interest rate indicators,and their transmission mechanisms depend on highly developed financial markets.At this stage,the operating objectives of China's monetary policy are mainly the liquidity of the banking system and short-term money market interest rates.The ultimate target is to maintain internal and external equilibrium.Debates on the quantitative and price types of intermediary targets have always existed and have not ended yet.Policy tools include traditional monetary policy tools and innovative monetary policy tools while the transmission mechanism is still dominated by commercial banks' broad credit.Third,the effects of monetary policy of quantity and price regulations are theoretically simulated,the simulation results based on the new Keynesian DSGE model including "double viscosity" show that in the absence of blockage and friction in the conduction link,China's price-based and quantitative monetary policies can have countercyclical regulatory effects on the ultimate target.The comparative analysis shows that the maximum transmission effect of price-based monetary policy on output,inflation,consumption,investment,labor demand,and wage levels is significantly greater than the maximum transmission effect of quantitative monetary policy,indicating that the transmission efficiency of China's price-based monetary policy is higher at this stage,and price-based indicators are more suitable as intermediate targets for monetary policy.Fourth,the results of empirical research based on the SV-TVP-VAR model show that under the current level of economic and financial development and the transmission path of monetary policy,price-based monetary policy and quantitative monetary policy have an impact on output,consumption,investment,and inflation.Important variables such as rates,stock prices,real estate prices,and exchange rates can produce countercyclical regulatory effects.With the improvement of the level of interest rate liberalization,price-based monetary policy and quantitative monetary policy have enhanced the regulation and control of output,consumption,investment,inflation,stock prices,and real estate prices.With the promotion of exchange rate marketization,the effects of price-based monetary policy and quantitative monetary policy on the exchange rate regulation have been enhanced.Except for the inflation rate,the effect of price-based monetary policy on all other indicators is generally stronger than that of quantitative monetary policy,indicating that price-based intermediary targets are better.Fifth,The results of the internal logic analysis of quantity and price transformation of China's monetary policy regulation show that,the main factors affecting the effectiveness of quantitative monetary policy intermediary targets include the stability of the money demand function,the level of financial system development,and the financing structure.The main factors affecting the effectiveness of price-based monetary policy intermediary targets include the degree of interest rate marketization and microcosmic bodies' sensitivity to interest rates.Changes in the currency creation channel can reduce the controllability of quantitative intermediary targets and their relevance to the ultimate target,and at the same time increase the relevance of price-based intermediary targets to the ultimate target.Monetization can reduce the controllability of quantitative intermediary targets,improve the controllability of price-based intermediary targets,and at the same time increase the correlation between quantitative and price-based intermediary targets and the final target.Changes in financial structure can reduce the measurability and controllability of quantitative intermediary targets and their relevance to the ultimate target,and enhance the controllability of price-based intermediary targets and their relevance to the ultimate target.Financial innovation can reduce the measurability and controllability of quantitative intermediary targets and their relevance to the ultimate target,and enhance the controllability of price-based intermediary targets and their relevance to the ultimate target.Taken together,the effectiveness of quantitative intermediary targets in China has declined,the effectiveness of price-based intermediary targets has increased,and the need for monetary-policy volume-price transition has become prominent.Sixth,this paper further studies the dual interest rate system,interest rate liberalization and interest rate transition policy,the results show that,China has completed nominal interest rate marketization at this stage,but in practice the problems of interest rate control and the dual-track interest rates system still exist.The typical characteristic of the dual interest rate system in China is the coexistence of the credit market interest rate(the planned rail rate)determined by the benchmark deposit and loan interest rate,and the currency and the bond market interest rate(the market rail rate),which are basically determined by the market.The empirical research results based on the MS-VAR model show that both the market rate and the planned rate have played a counter-cyclical control effect.Under the low-volatility zone system,the regulation effect on the output and inflation rate is stronger,and the intensity of the market rate control is significantly greater than the planned interest rate.Further analysis shows that the problems faced by China's interest rate marketization mainly include the market benchmark interest rate or interest rate corridor mechanism has not yet been formed,the savings preferences of residents and the supervision of the regulatory system have led to the rigidity of deposit interest rates,the lagging of internal bank pricing systems and management capabilities of commercial banks,local governments and state-owned soft budget constraints in the corporate sector resulting in insensitivity to changes in market interest rates,credit control and window guidance.Based on the above research conclusions and the current status of China's economic and financial development,this paper proposes the following policy recommendations,first,at the top-level design level,we should adhere to the direction of market-oriented reforms and unswervingly promote the change of the intermediate target of monetary policy from quantitative to price-based.Second,in the reform of the money market,the benchmark interest rate for deposits and loans should be gradually diluted,and a more market-oriented benchmark interest rate or interest rate corridor should be fostered.Third,in terms of capital market reform and improvement of regulatory policies,we must promote the construction of a multi-level capital market and improve the financial system and supervision mechanism.Fourth,in the reform of commercial banks,we should improve the pricing and management capabilities of internal funds.Fifth,in terms of major institutional reforms,we should break through a single financial reform thinking and increase the reform of the fiscal and taxation systems and the reform of state-owned enterprises.Sixth,in terms of credit policy and exchange rate reform,administrative intervention should be reduced and market-oriented operating mechanisms should be followed.Seventh,with regard to the direction of macroeconomic regulation and control,it is necessary to maintain strategic determination and improve the stability and resilience of economic growth.