Utilization And Analysis Of Money Policy Tool Of China Central Bank

In recent years, along with economic situation changing, monetary policy of China Central Bank was several transposition: we used"steady"monetary policy from 1997 to 2002.After 2003, the policy transited"steadily gradually and moderately contraction". Central Bank removed the word of"moderately"in 2008 and used the word of"contraction"directly, that indicated Central Bank's manner was more explicit. The rate was down in October, 2008.It sent out a signal which was clear: the monetary policy started"loose". Economic situation changed, the central bank money policy also changed too, the different monetary policy tools correspondingly had the different, but how to transform monetary policy tools to follow the economic situation and make tools to be more effective, that became one of important topics. This paper attempts to research which questions should be pay attention in monetary policy tool's utilization as well as corresponding policy's opinions in the analysis of economic transformation situation.The first part is the paper introduction, mainly elaborates the background of topic: in 2007, our country economical speed-up continually, for the resources, the environment and the inflation has created the huge pressure. But in this period, the international situation presented the change. The American subprime mortgage crisis was increasingly fierce, and it affected Europe, Japan and developed country as well as the numerous developing countries. The crisis has bred the worldwide financial crisis. In the theory, the research money tool's utilization and influence to the perfect monetary policy and regulative economy has the profound significance. In practical, according to different economical, the financial condition to choose suitable monetary policy tool is important safeguard of the monetary policy goal of the Central Bank. The literature summary report mainly summarize various scholars' analysis of monetary policy tools and Chinese economic situation evaluation, the US and developed country utilization of money instrument's analysis, our country should adopt what kind of tool coordination to achieve the good regulative effect and so on. The second part mainly briefes the connotation, the type, the characteristic and the nature of monetary policy. Elaborate the influential role and the goal of monetary policy. From three aspects of the definition, the function and the function process show the important monetary policy tools in detail: Bank reserve against deposits rate, open market operation, rediscount, with some selective monetary policy tools like window guidance and so on.The third part mainly analyzes important monetary policy tool's adjustment in both contraction and loose monetary policy. The Central Bank has started to adjust bank reserve against deposits rate in 19 times in 2007, 13 times upwards and 6 times declines. The rediscount was used few. In aspect of Interest rate, Central Bank reduced the interest rates in 6 times, and up it 4 times when the crisis erupted .But the last time raised the interest rate to set the record of the history. Moreover, the credit quota control and the window guidance's application didn't neglect. Finally, in view of monetary policy tool's adjustment to research monetary policy tool's superiority and existence question. The Using bank reserve against deposits rate frequently has those merit: the request of environment was low, the operating cost was low, and it was effective, simultaneously, the adjustment was hugeness, and function was also easy to reverse. The rediscount and the open market operation exist the problems of requesting the higher market development degree, but that were used frequently in west .The fourth part mainly introduces general monetary policy tool's utilization in the US, and the monetary policy tool as well as innovation tools which applied in this crisis. The US has restarted the discount window, once more applied bank reserve against deposits, but also reduced the interest rate many times. The main innovation's financial instruments include: Term Auction Facility(TAF),Term Securities Lending Facility(TSLF),Primary Dealer Credit Facility(PDCF).Regarding the US money instrument's application, the enlightenments which we obtain were that we must develop money market, speed up the interest rates liberalization, enhance the bulletin function of policy. Regarding this crisis, we should enhance the foresight and pay great attention to the policy operation flexibility as well as guaranteeing the starting point to be correct, grasping the adjustment dynamics and so on.The fifth part talk about how to enhance the efficiency of our country monetary policy tool's utilization. In the contraction monetary policy, the adjustment of interest rate, the credit control and the window guidance coordinate, in addition bank reserve against deposits' adjustment, distribute the Central Bank bill and the special deposits. Under the loose monetary policy, using the credit expansion the policy, reducing the interest rate and the bank reserve against deposits rate, using two methods of the open market operation and the rediscount to achieve one goal, carrying on the window guidance reasonably, guaranteeing that the financial institution's the fluidity is sufficient. At the same time, we should enhance the monetary policy the foresight, speed up the interest rates liberalization and the exchange rate system reform, enhance the monetary policy tool's flexibility and the validity earnestly.