The Impact Of Internet Finance On The Effectiveness Of China,s Monetary Policy

Nowadays,Internet technology is gradually progressing and popularizing,which deepens the penetration of traditional financial business.As a result,a new financial model——Internet finance,has emerged in China.Because of the short growth time of Internet finance,there is a regulatory vacuum.At the same time,it is outside the scope of the current monetary policy tools.The strong growth trend of Internet finance will inevitably have a certain impact on traditional finance,which will weaken the effect of the central bank's implementation of monetary policy on economic regulation.The high integration between the Internet and finance is an inevitable trend.Monetary policy,the main mode of economic regulation and control in China,has also attracted a lot of attention.It is very important to study its impact on the effectiveness of monetary policy in China.It is helpful to provide guidance for the formulation and adjustment of macro-policy,promoting the Central Bank to propose practical solutions to improve the effectiveness of monetary policy and to promote the economy steady and sustainable growth.This paper focuses on Internet finance and the effectiveness of monetary policy.Firstly,from the manifestation of the effectiveness of monetary policy,we find that it is mainly manifested in two aspects: the controllability of money supply and the stability of transmission channels.In the theoretical study,we start with the controllability of money supply,analyze the impact of its strong growth trend on money supply in China,and then do further research on the stability of transmission channels,mainly on the role of credit and interest rate transmission channels.Secondly,based on the purpose of testing the theoretical conclusions to make the research more accurate,this paper chooses the vector error correction model(VEC)to do the relevant empirical research,including the transaction volume of third-party payment platform,money supply,RMB loan balance of financial institutions and Shanghai interbank offering rate variables into the model,using the data from 2009 to the fourth quarter of 2018.Based on this,the paper construct a model to analyze the extent and mode of its impact on the implementation of monetary policy in China.The research shows that,firstly,the strong growth of Internet finance has led to the constant change of money supply,the decline of controllability and measurability,and the weakening of intermediary role.Secondly,on the one hand,it is not conduciveto the central bank's overall grasp of the scale of social credit,credit transmission channels are more difficult to maintain stability.On the other hand,it will also make the effect of interest rate transmission channel face greater uncertainty.This shows that the continuous development of Internet finance will have a certain impact on the implementation of monetary policy in China.Finally,this paper gives some policy suggestions on how to enhance the effectiveness of monetary policy in China.