The Study Of Monetary Policy Transmission Mechanism In Open Economy System

The monetary policy transmission mechanism is the way by which the monetary policy affecting the total demand, it decides the efficiency of monetary policy.In open economy system, the monetary policy adjustment effects decrease, the stability of media index of monetary policy also has been lessen and the externality of monetary policy increases. At the same time, the monetary policy transmission mechanism also has changed. This change includes the transform from money channel to credit channel, form interest channel to exchange rate channel, from money market channel to capital market channel. In open economy system, the interest rate channel has been blocked somehow because the interest rate stickiness. Interest rate is the price of capital, but it's stickiness makes it not flexible according to the capital supply and demand, then the efficiency of interest rate channel decreases. In open economy system, the effect of capital market channel increases. The capital market makes great effect on the monetary policy transmission. It makes the importance of policy transmission mechanism change. The principle parts of transmission have been enlarged. China's QFII gives a good chance to the development of capital market and enhancement of the capital market channel.In order to open up a patch for the china's monetary policy transmission in open economy system, we should reform the current pegged exchange rate system, , make interest rate marketlization and propel the development of capital market.