Research On The Effectiveness Of The Central Bank Bills Of China

Since its accession to the WTO on December11,2001, the openness of economicis deepening. Central banks are facing more complex domestic and internationaleconomic and financial situation, Implementation of monetary policy has also beendifficult to increase.At present, after the subprime mortgage crisis and the Europe debtcrisis,the recovery of global economic is slowing down.Some countries are still facingserious inflation, at the same time are bearing the risk of a large number of short-termcapital in and out. the global still face a potential outbreak of the next crisis. Domesticinflationary pressures just slightly reduced, the economy gradually resume rapid growth.In this context, it increase the difficulty of the operation of China’s central bankpolicy. but Central bank bills as the frequent use of policy instruments is more flexible,high-mobility, it play a significant impact on the effectiveness of the policy goals.Butwith the increase voting issue of the central bank bills, more and more problems comeout. More and more questioned the effectiveness of central bank bills. Some scholarsbelieve that the central bank bills will eventually be replaced by government bonds orother policy tools, it is only a temporary product, can not continue.As the increasingpressure of the interest payments faced by the bank notes, Some people believe that itmakes the effect of currency withdrawn from circulation small.First, the article analyzes the background of the central bank bills, as well as theadvantages and limitations of the tools of open market operations. The article believe thecentral bank notes have some limitations, But its advantages are obvious. If the centralbank can use reasonably, it is still able to effectively control the money supply, canensure the realization of the policy objectives to stable and rapid economic growth.Second, it analyzes the relationship between central bank bills and the money supply, thebenchmark rate. Again, based on the People’s Bank of China announced in2005to2011statistics, establish VAR model, the empirical proof of the central bank bills there is acertain influence on money supply and interest rates, But the effect is not obvious.Finally,put forward policy recommendations to improve the effectiveness of central bank bills.