Research On The Effect Of Hot Money On The Effectiveness Of China's Monetary Policy

Since 1990 s,China's balance of payments has been "double surplus",and its foreign exchange reserves are increasing.The RMB appreciation expectation is strong in the foreign exchange market,which leads to a large inflow of international hot money.However,after 2008 financial crisis,with China's economic growth slowing down,the scale of international capital that flows into our country has begun to decline dramatically,and it has even been in an outflow state in recent years.This is undoubtedly a frost to our economic development and the devaluation of the RMB.In order to maintain the stability of the currency in the foreign exchange market,the central bank intervenes actively.However,with the further opening of China's capital account and the accelerated pace of RMB internationalization,China's economy is increasingly closely related to the world economy and Monetary policy is more and more difficult to achieve the desired results.Therefore,it is of great practical significance to study the influence of international hot money on the effectiveness of China's monetary policy.On the basis of the definition of the international hot money,this paper expounds the basic features,the causes of the flow and the flow channels of hot money.On the basis of previous studies,this paper has analyzed the definition,measurement criteria and influencing factors of the effectiveness of monetary policy,as well as the basic theory of the effect of international hot money on the effectiveness of monetary policy in China.In terms of the calculation of international idle funds,this paper expounds the calculation process of the scale of the international idle capital in detail and analyzes the current situation of the international idle capital flow in China according to the calculation results and concludes that the international capital of our country is in a state of large-scale outflow in recent two years.This paper makes an innovative analysis of the influence of international hot money on the effectiveness of China's monetary policy.This article selects the money supply,the interest rate,the gross domestic product and the inflation as the index of the effectiveness of monetary policy and by using the collected data,we quantitatively investigated the impact of international hot money on the index of the effectiveness of monetary policy of by establishing VAR model.The money supply,gross domestic product,consumer price index and interest are indicators of the effectiveness of monetary policy The conclusions are as follows: first,the influx and outflow of international hot money will lead to a significant increase and decreaseof GDP and M2,and this effect will be intense and lasting for a long time;second,the inflow and outflow of international hot money will increase and decrease the CPI,but the duration is relatively short;third,the inflow and outflow of international hot money will have a negative and positive impact on the interest in the short term.Therefore,the movement of international idle funds will really affect the effectiveness of monetary policy through gross domestic product,money supply,consumer price index and interest rate.Finally,On the basis of the summary of the above analysis,this paper puts forward some suggestions for China's international hot money regulation and some measures to improve the effectiveness of monetary policy from three aspects,namely,strengthening the supervision of international idle funds,accelerating the reform of China's financial system and improving the transmission efficiency of monetary policy.