The Influence Of Financial Tool Innovation On Monetary Policy

In course of integration of world economy,finance and economy has been becoming indivisible. Its contribution to economy is becoming greater and greater. Finance has already permeated through every field in econony with its stronger and stronger power.In past decades of years, the most important reason for finance developing so fast is financial innovation ,especially financial tool innovation.The development of contemporary financial tool innovation began in the 1970s, reaching the zenith in the 1980s, still developing fast when entering into the 1990s. When giving great power to economy, financial tool innovation is increasing risk of financial system, as well as impacting macroeconomic policy of each government.Monetary policy theory is part of monetary theories of practical significance. Since the coming into being of the moderm monetary theory in the 1930s, the monetary authorities of all western countries have been applying it, trying to make it one of the effective macroeconomic policies. At the same time, monetary policies also has become an important macro-contral tools in the government of a country, playing a crucial role in a country's economy.The thesis consists of four chapters. Chapter one introduces the research background,research target,intention and implications.It also makes a brief introduction of the research findings already achieved by Chinese and foreign scholars and summarizes the main thoughts and ideas in the following chapters . Chapter two analyzes the influence of financial tool innovation on money demand and supply and establishes a microeconomic model of money demand .Chapter three analyzes financial tool innovation lashing at the transimission mechanism of the traditional monetary policy and manifests its influence of effectiveness of traditional monetary policy.Chapter four analyzes the influence of Chinese financial tool innovation on monetary policy and puts up relative suggustions on how to improve monetary policy of central bank . At last , it devises the theoretic summarization to the whole-length discussion.