On China's Monetary Policy Regulation Mode And Its Transformation

In October 2015,the people's bank of China canceled the restrictions on deposit interest rate cap,since then directly control of lending and deposit rates no longer exists.Interest rate marketization provides the financial ecology for the transformation of the monetary control mode.Based on the quantitative monetary regulation and price currency control,this paper defines the connotation and selection-criteria of the two modes and combs the monetary economics theory of them.Then,we respectively evaluate the effect of quantitative control mechanism and price control mechanism.With the deepening of market-oriented interest rate reform,the financial innovation and financial disintermediation accelerates and financial market breadth and depth strengthens.M2 and social financing scale are not suitable for the intermediate target of monetary policy in our country.Shibor has qualified as the benchmark interest rate,which conforms to marketability,controllability,fundamentality and correlation.People's Bank of China can adjust Shibor through the open market operations and the statutory deposit reserve ratio.The propagation from Shibor to long-term bond market interest rates has been smoothly,but Shibor has little influence on the commercial bank lending and deposit rates.Monetary policy intermediary goals have got the basic conditions to transform from the quantitative mode to the price mode.Constrained to the lack of breadth and depth of financial market,soft budget constraint of company(which is insensitive to interest rates),the thorough transformation from quantitative-control to price-control is not desirable.In the transformation of monetary policy framework from quantitative to price,China should retain the quantitative control mechanism and improve the price control mechanism at the same time,building the "synergetic frame with quantity and price":Using quantitative monetary tools to adjust financial institutions liquidity;using price monetary tools to adjust the social financing costs and lead the liquidity to the right realm.On the one hand,meliorate the price(interest rates)regulation system:promote the marketization of interest rate,make Shibor become the main body of the benchmark interest rate system;reconstruct the micro-foundation of national economy to improve the sensitivity of the public to the interest rates strengthen the expectation-management of monetary policy to guide the public to make rational responses to the operation of central bank and reduce the probability of the game between the public and central bank to improve monetary policy effect.On the other hand,considering the interest rate transmission mechanism is not yet perfect,we should optimize the original quantitative monetary policy framework:meliorate the statistical caliber of quantitative monetary policy;innovate the monetary tools to accurately adjust the liquidity of the financial market and promote the price regulation model.Through the combination of quantity and price,we can make up for the inadequacy of single mode in the transitional period and promote the gradual transformation of monetary framework.When the infrastructure of financial markets completes and the mechanism of interest rates matures,the monetary policy framework will turn to the price frame.Finally,we can establish a new monetary framework basically based on the parameter of interest rates.