The Research On The Impact Of International Capital Flows On The Effectiveness Of China’s Monetary Policy In The Process Of Internationalization Of The RMB

Since entering the 21 st century, China’s sustained and rapid development of national economy, the economic aggregate ranked second, Import and export trade and foreign exchange reserves ranked the highest in the world. With the gradual improvement of the level of economic opening to the outside world in our country,cross-border RMB trade settlement business and the RMB offshore market development is rapid, The RMB began to perform the function of international currency in some countries economic activity, These signs are that accelerating the process of RMB internationalization, Affected by the process, China’s international short-term capital flows, no matter from the frequency, scale or way, shows a tendency of more and more complex, this will affect China’s monetary authorities policy formulation and implementation process, and affect the effectiveness of monetary policy in our country, and threaten the stable operation of the national economy. So it has important practical significance to study the international short-term capital flow’s influence on the effectiveness of monetary policy in the process of RMB internationalization.In this paper, with the advancement of the internationalization of RMB as the background, to study the new situation of international short-term capital flows of some changes and analyze its impact on China’s monetary policy effectiveness. First of all, this article starts from the theoretical analysis, and study the international short-term capital flow influence on the effectiveness of monetary policy related theory on the basis of predecessors’ achievements, and study the money supply,interest rates, exchange rates and other indicators of the role in the monetary policy transmission; Secondly this article introduces the process of RMB internationalization in our country; The last is the empirical part of this article, by building the VAR model, and using measurement method selection between January 2005 and December 2005, ten years of international short-term capital flow, money supply,interest rate and exchange rate four variables, analysis of international short-term capital flows and the relationship between the effectiveness of monetary policy in our country. According to the results in the empirical analysis, the international short-term capital flows through the money supply, interest rates, exchange rates and other intermediary goal influence the effect of monetary policy in our country, Along with the internationalization of RMB,the influence will also will be more and more significant, China’s monetary authorities on the regulation of the national economy will face more complex environment. Finally in the face of the impact of the international short-term capital flow, and how to improve China’s monetary policy effectiveness targeted, the article provides targeted policy recommendations.