Research On Choosing Intermediate Target Of Our Country In Terms Of Finance Opening

As a financial finger to real economy, intermediate target plays a vital role in regulation of monetary policy. Finance opening is the trend of economic development, especially after entering into WTO in Dec 2001. So we have necessity to do research on choosing intermediate target in our country.The main point in my article is that due to going deep into world, the operating environment of monetary policy has changed. The validity of monetary supply index declined. The main reason is the inflexibility of foreign currency occupancy, the declining of base money's control, the volatile character of currency multiply, the unfit range and classification of monetary supply. My suggestion for reform is as follows. In short-term, we should maintain money supply target system and reform statistical range and means. In medium-term, we should design a collection of indexes including money supply, financial asset price and exchange rate. In long-term, we try to put inflation target system into effect.The innovation of my article lies in: 1. Doing the research of intermediate target in terms of finance opening, which is different from common research. 2. From the prospective of inside and outside confliction and the origin of monetary supply index, I dig out the reason why the validity of monetary supply index declined. 3. Put forward six new factors (Foreign banks' entering into China and doing business with RMB, Currency substitution, Capital flow secretly, Finance innovation, Development of capital market and the Effect of QFâ…¡ system) that affect intermediate target. 4. Lay down a reform schedule of " three steps" and refute the points that favor to other target system.My article falls into four chapters. In the first chapter, I will discuss the theory of choosing intermediate target. In the second chapter, I will make demonstration on intermediate target of our country and get reasons why the validity of intermediate target declined. In the third chapter, I will discuss six new factors that influence the validity of intermediate target. In the forth chapter, I will discuss the step and the scheme of reforming intermediate target system in the future.