The Conflict And Coordination Management's Research Of China Monetary Policy And Exchange Rate Policy On The Open Economy

It has been short of enough notice in the coordination of the monetary policy and the exchange rate policy in our country's macroeconomic regulation for a long time. The monetary policy and the exchange rate policy nearly have been separated completely. Since 1994, our domestic monetary policy and the exchange rate policy appeared three obvious conflicts, including the conflict between 1994 and 1996, when the foreign exchange reserve increased fast, yet the inflation grew highly; the conflict between 1997 and 2000, when the People's Bank reduced the rate to stimulate the inner demand and resolve deflation while it also tried to keep the fixed exchange rate; and the conflict between 2000 and 2004 when the People's Bank tried to keep the fixed exchange rate but the financial department tempted to make inflation rate low. Now, it is similar to the conflict between 1994 and 1996. And the conflict bottleneck is forming. The question of the coordination between the exchange rate policy and the monetary policy has been more and more important.Looking through China monetary policy and the exchange rate policy over 1994, the conflict basically may be classified the contradiction between the RMB inner value and the RMB exterior value. So the root of the conflict between China monetary policy and the exchange rate policy obviously is the opening of our economy. Therefore the paper analyzes the deep reason which leads to that conflict under the open economy in three angles, including the Chinese capital invalid control, the malfunctions of China currency exchange rate conduction in the open economy and the conflict between China fixed exchange rate system and the money intrinsic supply, The coordination management practice China took to solve the conflict between the monetary policy and the exchange rate policy, did not settle the problem fundamentally and effectually. Because the flush operation carried on by Chinese government is just a strategy called "buys the time", which delays the policy adjustment in unlimited time, but the debt accumulation will counterwork the flush operation. Therefore, the general method is unable to solve the conflict fundamentally.Under our present monetary and exchange rate system, there are two main methods resolving the conflict including the flush operation intervention of the monetary policy and the neutralization financial policy. But it does not settle the problem fundamentally. We think the flaws in the present currency exchange rate...