Research On The Intermediate Target Of Monetary Policy In The Background Of Financial Opening Up To Foreign Countries

Intermediate target plays the vital role in regulation of monetary policy. Finance opening up to foreign countries is the trend of the economic development in China, especially after joining in WTO in Dec 2001, this tendency obviously speeds up. In 2003 the Standing Committee of the National People's Congress passed the Bill for amendment of People's Bank of China Law, determined the ultimate objective of monetary policy in the next section of times which will be: Stabilize currency value, promoting economy development. Therefore, we have necessary to do research on choosing intermediate target of monetary policy under the new ultimate objective of monetary policy and the financial opening up to foreign countries conditions.The main content of this article includes: By the researching on the intermediate target of monetary policy in theory and the summary of the application experience of many countries, concludes that choosing intermediate target of the monetary policy bases on the national economy background and the ultimate objective of monetary policy. Because the recent years our country finance opening up to foreign countries gradually deepened, the validity of monetary supply declined. Moreover, the adjustment of the ultimate objective of monetary policy causes the present intermediary target need to be reformed. The researching on each plan in theory and in practice indicated that, there is not enough foundation for the operating of the interest rate target; the exchange rate target is not suit for the economical characteristic of our country; the inflation target needs the construction of foundation. The reforming suggestion is: In the short-term, still depend on the money supply target, but must renew the statistical scope and improve statistical method; in intermediate stage, establish the vertical target complex including interest rate in primary, money supply and exchange rate; In long-term, gradually put the inflation intermediate target into use.The fresh idea in this article includes: 1st, do research in the background of the finance opening up to foreign countries and the new monetary policy ultimate objective, emphasize the intermediate target must be compatible with the financial environment. 2nd, emphasize the importance of the exchange rate intermediate target in the future monetary policy. 3rd, Propose the reforming strategy of intermediate target according to the finance opening process.The article includes seven chapters: The first chapter is literature review; The second chapter is introductory; The third chapter introduces the theory and practice evolution of the intermediate target in some countries; The fourth chapter introduces the financial environment after China joining WTO; The fifth chapter analyzes the effect of the financial opening over the money supply intermediate target; The sixth chapter discusses the reforming plan of the intermediate target; The seventh chapter proposes the reforming selection of the intermediate target of monetary policy.