Research On Government Debt And Central Bank Independence

The2007outbreak of the subprime mortgage crisis spread to the global financial crisis, until the recent sovereign debt crisis intensified,people known not only developing country to appear a sudden collapse of the debt crisis,let people to be re-examined for the central bank independence. Recently, the the original Chinese Monetary Policy Committee Mr. Li Daokui wrote an article in the media, to completely negate the inherent understanding of central bank independence, is about to see it as a myth the ECB’s independence. Implication by the Cabinet to give monetary policy eventually finalized model reasonably well, the so-called independence of the central bank simply is a worthy goal, according to his words,"independence is a useless superstition"."Fanacial is a mother of governance". China is currently in the high-speed development and profound changes in the socio-economic transformation. Whether the occurrence of any power driven debt crisis? Whether China will deal with the current debt crisis in local government? It is in this context that by analyzing government debt and central bank independence, hope for today’s government debt crisis to solve practical way.Based on government debt and central bank independence literature system, deeply analyzes the formation mechanism of government debt. By the dependency from Treasury bonds, the debt-to-gdp ratio, deficit of three indicators of national debt scale in our country, concluded that China’s debt-to-gdp ratio and lower deficit two indicators, and debt dependence on the high side, in general, national debt scale is in below the line. Central bank independence is decided to fiscal and monetary policy coordination degree of the key factors, based on the fiscal and monetary policy coordination theory and empirical research, demonstrates the policy of coordinating fiscal and monetary policy coordination to reduce friction loss for the importance of sustainable economic growth. Finally, the paper reference to western countries the Treasury and the central bank communication way, about our government debt management and strengthen government is given for a central bank regulation policy recommendations:First is under the leadership of the state department establish special open market operations of the organization,within the monetary policy committee, established in the framework of monetary policy mechanism of coordination and communication; second is to improve the currency, bonds and other financial tools for the role of fiscal and monetary policy coordination; third is to establish a long-term effective government debt regulatory mechanism, prevent the Chinese government and local government debt crisis.The innovation of this paper include:First, this paper a reversal of strengthening the independence of the central bank often Theory, fully demonstrated the need to strengthen government control for the central bank to reduce the policy friction loss, the strengthening of fiscal and monetary policy co-ordination and innovative to weaken the central bank independent and to strengthen government control for the central bank.Second,examined three indicators from the national debt dependence, debt burden rate, the deficit rate for the size of the National Debt, draw two indicators of our national debt burden rate and deficit rate is low, while the dependence on high national debt, but the overall said, government debt is in warning below. Therefore, as long as our country is to maintain the current economic growth, China’s government debt as a percentage of GDP will be stable, sustained growth will not be unlimited, the scale of China’s national debt is sustainable.