On The Choice Of Intermediary Target Of Monetary Policy In China

At present, the final target of China's monetary policy is to"maintain the stability of the value of the currency and thereby promote economic growth". To achieve this target, the central bank must set an intermediary target according to the economic situation. Since 1996, money supply has played an important role during the operation process of monetary policy. But the present economic situation is much different from the past. The economic environment is more open now and the finance market is deeper. It is now a hot issue whether money supply can continue to be the intermediate target.Applying the qualitative analysis method, this paper studies the suitable choice of the intermediate target of China's monetary policy. On the basis of studies about the relevant theory, the inside and outside practice as well as the present economic situation, the following conclusion can be draw: money supply is no longer suitable to be the intermediate target. Referring to the western experience and Taylor Theorem, China should set the real interest rate as the future intermediate target.