Effectiveness Analysis Of Chinese Market Benchmark Interest Rate Under The New Monetary Policy Framework

In order to achieve the desired ultimate goal,the central banks around the world choose different monetary policies according to their own reality,and their effectiveness is related to the effectiveness of achieving the ultimate goal.In recent years,China’s economy has shown explosive development.The original quantitative monetary policy has begun to fail gradually and can?t meet the needs of the People?s Bank of China.Therefore,China’s monetary policy framework has begun to shift to a price-based monetary policy framework.In the new monetary policy framework,the key point is to determine the Market Benchmark Interest Rate.After years of exploration and practice,through learning from the experience of developed countries in the West,the People’s Bank of China officially announced the establishment of Shanghai Interbank Offered Rate(Shibor)in 2007.Since then,to enhance the independent pricing ability of financial institutions,various policies have been introduced to pave the way for it to become the Market Benchmark Interest Rate in China.After more than ten years of development and evolution,whether Shibor has the ability to become the Market Benchmark Interest Rate in China,and its transmission and effectiveness is of theoretical and practical significance.Firstly,this paper discusses the current situation of China’s monetary policy framework through domestic and foreign research results and current situation.Because of the gradual failure of quantitative monetary policy,China is forced to gradually turn to price-based monetary policy.Then,it briefly explains the relevant theory of monetary policy interest rate transmission mechanism.At the same time,drawing on the historical analysis of Market Benchmark Interest Rate in developed countries,this paper discusses the choice of Market Benchmark Interest Rate in China.Secondly,this paper uses empirical analysis to verify the validity of Shibor as the Market Benchmark Interest Rate in China.Finally,according to theoretical research and empirical analysis,the paper gives some recommendations to improve the effectiveness,so as to further improve Shibor as the Market Benchmark Interest Rate in China.The innovation of this paper is mainly based on the combination of theoretical research and empirical analysis.Under the background of the transformation of China’s monetary policy framework,it firstly expounds the theory of choosing Shibor as the Market Benchmark Interest Rate in China with the theoretical research of domestic and foreign economic and financial experts.Secondly,in order to suppress the data fluctuation caused by accidental factors,the Shibor?s data is pre-processed by the monthly average of the arithmetic number from 2007 to 2018.Finally,in order to get a relatively accurate conclusion,the data of short,medium and long terms of Shibor are selected respectively,and the validity of Shibor is fully tested by the three selection criteria of the Market Benchmark Interest Rate in China.