Research On The Construction Of Interest Rate Corridor In China

Since the outbreak of the global financial crisis triggered by the U.S.subprime mortgage crisis in September 2007,the global economic situation has deteriorated day by day.In order to cope with this crisis,the western developed countries have all adopted loose and unconventional monetary policies,which brought unprecedented impact on the world economy.Since 2012,Chinese GDP scale has bid farewell to 8%rapid growth.The GDP growth rate has started to decline.In 2014 and 2015.the GDP growth rate dropped to 6-7%.with greater declined pressure,the macro-economy has entered a "new normal.”In this new economic situation,the traditional quantitative monetary policy will be not helpful to resolve the overcapacity,monetary risk and adjust the economic structure because its feature is total regulation.Especially in the process of the market-based interest rate reform in our country and the continuous emergence of the financial innovation and the rapid development of Internet finance,the relationship between the demand for money as the intermediary target of monetary policy and the macro-economic variables such as price growth and economic growth's stability has declined continuously.However,some of the tools and mode of operation in the traditional monetary policy frameworks mainly view the money supply as the core,which inevitably leads the traditional monetary policy invalid.Shibor has several unregulated surged in 2013 and the volatility of interest rates tended to be fierce,which even required the Central Bank to effectively manage and regulate interest rates.Currently.Chinese economy is at the crossroads of quantitative and price-based monetary policy.Research on how to construct a price-based monetary policy operating framework is an inevitable choice and has very important theoretical and practical significance for the development of the current Chinese economy.In this paper,we use the relevant theory of interest rate corridor as the logical beginning of analysis,and use the relevant data of our country and foreign country to study the effect of interest rate corridor through comparative analysis,that is.whether interest rate corridor can decline the volatility of short-term interest rate in money market.Then,this paper divides the Shibor into two part with July 20.2013 as the dividing line and separately establish a GARCH model to study the volatility of short-term interest rate in our country and put forward that is necessary to construct the interest rate corridor in our country.Finally,it studies how our country should construct interest rate corridor.At present,China will play the role of standing lending rate as the ceiling of interest rate corridor.Theoretically,excess interest reserve rate should be the floor of interest rate corridor.However,the excess reserve interest rate in our country is only 0.72%,this not only results in the problem of excessive width and asymmetry,but also is very difficult to support the floor of the corridor.In the choice of policy interest rate and benchmark interest rate,this paper analyzes the linkage between repo rate in inter-bank market and Shibor by setting up VAR model.The empirical result shows that there is a significant correlation between the two.Therefore,we can separately use the two as the policy interest rate and the benchmark interest rate in the interest rate corridor.In the design of the width of the interest rate corridor,this paper makes the comparative analysis of other countries that have implemented the interest rate corridor and finds that there is a positive correlation between the interest rate corridor width and the volatility of short-term market interest rate.However,this does not mean that the width of the interest rate corridor continues to narrow is the best choice,which requires constant exploration and adjustment during its implementation.