| Monetary policy's intermediate target serves as the bridge between central bank's intent and monetary policy's ultimate target, and its effectiveness is decisive to the results of monetary policy. In the context of financial liberalization and globalization, the effectiveness of money supply as intermediate target is declining, which has made many countries transfer their intermediate target towards interest rate. Based on western countries'experience and China's own situation, this thesis studies the feasibility of choosing interest rate as intermediate target and its operation mode in China.Although in China there has already been some discussion among scholars about intermediate target, different opinions still exist. In order to test the effectiveness of money supply and the feasibility of interest rate more objectively and scientifically, this thesis adopts an empirical study which compares two periods divided by year 1992, when China began its market economy reform.By qualitative and quantitative study, the author believes that at this stage money supply has become unqualified as intermediate target, while interest rate is an eligible choice due to its growing power upon the economy. In the next part, this thesis further analyzes the prerequisites and necessary matching mechanism to support the intermediate target of interest rate. Since interest rate liberalization is the basis for the implementation of the new intermediate target, this thesis puts forward the main measures and tasks to deepen China's interest rate liberalization reform. At last, this thesis suggests a two-step schedule for the transfer of China's intermediate target and votes for"interest rate corridor"as central bank's benchmark interest rate operation mechanism in the future.The stage-by-stage analysis, the suggested steps of the transfer and the ideas of interest rate operation mechanism will sure to serve as valuable reference for China's monetary policy implementation. |
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