Study Of The Changing Social Financing Structure’s Influences To The Selection Of Our Country’s Monetary Policy Instruments

Monetary policy is an important way of a country’s macroeconomic regulation, in different economic times, choosing of a right monetary policy plays a very important significance for improving the regulation effect of monetary policy. Monetary policy generally completed a regulatory process through policy instruments, intermediate instruments and the ultimate goal, the selecting of the monetary policy instruments is the first stage of the monetary policy regulation, in the history of our country’s monetary policy regulation, because of its immediate regulating effect to credit scale and the money supply, quantitative instruments well adapted to the development of the financial market in the past few decades of China. However, in recent years, the rapid development of China’s direct financing market, for example, the fast expanding scale of debt financing and equity financing, the shadow banking system’s " blowout " type of development, and the increasing type and quantity of financial institutions, all these changes help enterprises obtain increasingly diverse financing channels, at the same time, the proportion of RMB loans in China’s total social financing emerges a declining trend, social financing structure has been changed. These changes help decrease the dependence of the social financing demands to bank credit, so that it makes some negative effects to our country’s monetary policy mode, for the reason that such monetary policy has always treat quantitative instruments as the main policy instruments and RMB loans as the monetary policy intermediary target. With the rapid development of China’s financial market and financial reform progresses, the marketing pace of interest rate and exchange rate will be faster and faster, the application conditions of price instruments will be more and more mature as well. Due to price instruments are affected by the impact of asset prices to the main micro spontaneous behavior to achieve the ultimate goal of monetary policy, in the case of the rapid development of direct financing, compared to quantitative instruments, price instruments has obvious advantages, so that in the long term, our country should make the quantitative monetary instruments change to price-based instruments. Firstly, this paper analyzed the concept of China’s social financing structure, the development process of social financing structure, and the changes in the application of the monetary policy instruments, then this paper analyzed in detail that under the background of the changing social financing structure, how to select the monetary policy instruments. Through these analysis, this paper believe that the quantitive monetary policy instruments are suitable for both uncultured and low rate elasticity markets, while price-based instruments are suitable for cultured and high rate elasticity markets. For the reason that our country still has no marketed rate and exchange rate, the finance market in our country is still uncultured. Additionally, the changes in the social structure of financing added new credit channels and monetary channels, so that China’s M2caliber becomes more and more complex, these changes make the regulation effects of quantitative instruments become weaker and weaker, at the same time, the changes in the social structure of the financing has an inherent requirement of accelerating the interest rate marketing pace, such requirement has an important role in promoting the market environment of the price-based monetary policy. Accordingly, this paper hold the opinion that in a short term, quantitive monetary policy instruments should be still our country’s main regulative tools, however in the long term, our country should make the quantitive instruments transform to price-based instruments, make price-based instruments as the main monetary policy instruments. Followed these analysis, empirical analysis is then compared the regulation effects of quantitative monetary policy instruments and price-based monetary policy tools. Empirical analysis shows that:the regulation of statutory deposit reserve ratio can obviously influence CPI, however, the elevation of interest rate makes CPI the same response, so ti can draw the conclusion that quantitative monetary policy instruments are better than the price-based monetary policy instruments. To the regulation effects of social financing scale, interest rate is better than the statutory deposit reserve ratio shows that, followed by the gradually developing of the social financing structure, the regulation advantages of price-based monetary policy instruments will be gradually exerted as well. After theoretical and empirical analysis, this paper finally gave some suggestions to how to improve the regulation effect of monetary policy instruments. First, China should implement different reserve systems in different area. Second, further enrich and develop its bond market, enlarge the participation Scope of its open market operations. Third, accelerate the interest rate market pace, make the interest rate completely market. Forth, enlarge the exchange rate fluctuation range gradually, accelerate the exchange rate market pace.