Adjustment Of The Intermediate Target Of Monetary Policy In China After Wto Accession

The intermediate target is an intermediate variable in the transmission process of monetary policy, which can be observed and controlled, serving for the ultimate target. Its diversity lies on the different standpoints of transmission mechanism of monetary policy claimed by scholars. The Keynesians advocate interest rate target while the monetarists support money supply target to be the intermediate target. In addition, other intermediate variables are also proposed, such as bank credit, stock price, exchange rate, etc.In retrospect, the intermediate target varied from the cash target to the bank credit and then later to the current money supply target in China. And this process corresponded reasonably to the developing economy realities. At the beginning of 1990s, the money supply target had performed meritorious effects on controlling the serious inflation, and made great contributions to the increase of economy. However, the inadaptability of the money supply target has demonstrated notably more and more in the recent years, when it faced the continuous economy deflation, especially after China joined WTO, with financial deepening in financial mechanism. We can say that the money supply target has been suffering from grim challenges,Certainly, the central bank, commercial banks, enterprises, financial market and other aspects of economy have undergone greatly changes in China. While their developments are unsatisfacted. As a result, the effect of the intermediate target is influenced hugely.While, during the interim after China joined WTO the money supply target will have existed for periods of time because many reforms are in progress, but the ebbing tread of its utility will never be reversed. At the same time, the interest rate can realize marketization finally. Due to there are strong limits to the other intermediate targets in current circumstance, it is tend to advance the adjustment progressively and stage by stage, of which the focal point is to choose the interest rate target, which implemented generally in now world, as the intermediate target of monetary policy.So now, complying with the development of finance, we should take positivemeasurements to innovate relevant systems, and gradually practice the interest rate target.