The Choice And Research Of The Post-crisis Monetary Policy Intermediate Target

Accurate choice of intermediate target for monetary policy is important for achievingthe ultimate goal of monetary policy. The monetary policy transmission mechanism and theprocesses can be run well or not is depended on the measurability, controllability andpertinence of the intermediary target of monetary as the intermediate target of the State, itneeds to consider many issues. Not only to study the very kind of intermediary target ofmeasurability, controllability and pertinence, but also according to the financialenvironment to chose the economic index. Then pick the most suitable index as theintermediate target of the monetary policy.Recently, China is on the recovery phase after the global financial crisis caused by thesubprime loan crisis. Money supply is still the used as the sole intermediate target ofmonetary policy. However, as the speed of economic globalization become more quickly,the disadvantage of the intermediate target which China is using now, the money supply,seems more and more obviously. It appeared many in such problems:the endophytism ofthe basic currency, the velocity of the circulation slowing down, and the instability ofmoney multiplier. A lot of countries use inflation of their own countries. Choosing theseeconomic indexes as intermediate target has special requirement for the economicenvironment, but China’s economic environment is not so mature in this time. We haven’tgotten the conditions that mentioned above. In this situation, China has to continue usingthe money supply as the intermediary target of monetary policy, at the same time, Chinahas to improve the monetary policy transmission mechanism. And raise some improvementmeasures, for instant, revision the money supply statistical caliber, complete the foreignexchang management system, improve the monetary policy transmission mechanism andthe independence of central bank. But as the economy develops, the economicglobalizatian fully over the whole world. The effectiveness of money supply reduced ishardly changed. We have to actively promote the marketization of the interest rates. Andset the stage for the changing of intermediate target of monetary policy from money supplyto interestrate.