Economic Transformation In China's Monetary Policy Target System Build

The intermediate targets of monetary policy are essential to the success of monetary policy. The choice of intermediate targets of monetary policy depends on the economic conditions such as the stages of economic growth, the banking system, the development of financial market, as well as the institutional reform. Considering the expediency of the money supply as our current intermediate target of monetary policy, we must pitifully admit that serious problems exist in its measurability, availability, relatedness to goal, and anti-disturbance. The cause lies in the fact that we are still under the economic institutional change, which presents many uncontrollable factors to operation of monetary policy as well as block the transmission mechanism of monetary policy. Therefore, the reformation to the current intermediate target of monetary policy is necessary for the further development of our economy and the efficiency of macroscopic readjustment and control. After comparing of several intermediate targets, this paper constructs a system of intermediate targets of monetary policy, or"a basket of intermediate targets", suggests that the rate of inflation should be a major target with money supply, money market rate and other indexes as the sub-targets subservient to the decision of inflation target. For the operation of this system, some financial reformation is needed, including the enhancement of the central bank's independence, the further development of monetary market, and flexibility of the interest rate.