Research On The Efficiency Of The Monetary Policy Discretionary Choice Under The Constraint Of Financial Stability

The effectiveness of monetary policy is closely related to the level of economic development and the stability of the residents' living environment.Its four major goals are the main orientation of the policy.The central bank focuses on the stable operation of the entire economic system.With the in-depth exploration of economic theory,theoretical and practical circles generally believe that the primary goal of monetary policy is to stabilize the price level and maintain it at a certain level,which is the precondition for the steady development of the economy.Therefore,countries have formed a series of monetary policies accordingly,with monetary stability as the primary goal,and on this basis,they have established a policy framework for macroeconomic regulation and control.An important indicator of whether a country's economy is operating effectively is to measure whether the country's financial system is operating in a sound state.The monetary authorities are therefore focusing on the soundness of the financial system as an important policy goal.At present,most of the monetary instruments and measures adopted by our country focus on monetary stability and economic growth.There is insufficient discussion and attention on the factors of financial stability.With the dramatic fluctuations in the stock market in 2008,the huge fluctuations in the real estate market and the "three-fold superposition" of the financial system's instability,the monetary authorities in China should seek a stable financial system in economic reforms and innovations.The effectiveness of monetary policy.Through the overall research results at the current stage,it is found that more scholars prefer to adopt the macro-prudential policy to achieve financial stability and use monetary policy to achieve monetary stability.Many scholars have pointed out that the relationship between financial stability and monetary stability is contradictory in the short term,but it has a consistent characteristic in terms of long-term effects.Therefore,in the study of the relationship between the two,the paper tries to find out the direction,size and influence mechanism of the relationship between the two,and provides a certain policy reference for monetary authorities.Firstly,the paper describes the necessity of the study from the three parts of the research background and the meaning of the research purpose.Through the literature review,we can understand the current domestic and foreign scholars' literature on financial stability and currency stability.Second,analyze the financial instability hypothesis,monetary stability theory of financial stability,bank run theory and financial stability theory based on adverse selection.Then,in combination with the former's index synthesis method,eight basic indicators are selected to finally synthesize a comprehensive financial stability index.Finally,the establishment of BVAR model to empirically analyze financial stability and monetary policy stability provides a theoretical basis for the central bank to formulate monetary policy based on financial stability constraints.