A Study Of Chinese Monetary Policy Transmission Mechanism: 1998-2005

Since 1998, the validity of Chinese monetary policy has been improved, however, there are still many problems showing ineffectiveness. The reasons are diverse, and the key one is the blockade of the monetary policy transmission mechanism. The Chinese monetary policy transmission mechanism is changing from the single-direct credit channel to multi-channel transmission which includes credit channel, interest channel and non-money capital price channel. In the recent years, because of the in-coordination between the commercial banks reform and the whole financial system reform e.g., the credit channel has been blocked up before the establishment of the interest channel and non-money capital price channel, and it makes the monetary policy can not transmit smoothly, efficiently and timely. And the blockade affects the monetary policy validity greatly. Theoretically, from the way of the reform direction the interest channel and non-money capital price channel is supposed to be the main-channel of Chinese monetary policy transmission mechanism. But considering the China's fact, credit channel is the main transmission channel. Thus, the actual and emergent task is to improve the condition and the environment of the monetary policy transmission. And in the long run, the essential task of perfecting the monetary policy transmission mechanism and improving the monetary policy validity is to perfect the currency market and push the interest rate marketing and create better financial ecosystem to make the full use of the currency channel.