A Study Of Interaction Between The RMB Issue Way And The Interest Rate Marketization

Since 2002, the purchase of foreign exchange become the main mode of China’s central bank issued the monetary base. From November 2004 to May 2012, more than seven years of time, why the marketization of financial institutions loaning and deposit rates did not make any progress? And during this period, the people’s bank of China’s foreign exchange increased from 4.349 trillion RMB yuan to 23.516 trillion RMB yuan, in our country by purchasing foreign exchange money way to issue money has what kind of impact on the marketization of interest rate? Along with the further advance deposit interest rate marketization, what will RMB issue mechanism and the monetary policy framework be affected? How does RMB issue way meet the demand of the interest rate marketization completely? This is the problem what the paper needs to systematically research.This paper adopts the theory of logic analysis and mathematical derivation relationship equation econometric analysis, time series data(including: ADF unit root test, Johansen cointegration test, and based on vector autoregressive(VAR) model and vector error correction(VEC) model of granger causality test, impulse response function and variance decomposition analysis of measurement), the purpose of the paper is to systematically study the internal mechanism of interaction between the RMB issue way and the interest rate marketization, on this basis, this paper analyzes the condition and timing of interest rate marketization reform completely, puts forward the measures of interest rate marketization reform completely; And based on the interest rate marketization completely to the requirements of the monetary policy framework, the reform measures of the RMB issue way are put forward. This paper main work includes the following aspects:First, research the way of currency issue. The way of currency issue performs for the central bank’s assets and liabilities; buying bonds and buying foreign exchange and loaning of the central bank are three major the way of currency issue; the oversea central banks stress on the perspective of profit and loss statement, the assets of foreign central Banks attach great importance to their risk management. At present, the way of overseas base currency issue are characteristics "buying and selling government bonds and auxiliary, central bank loans". buying foreign currency to issue RMB for exchange rate formation mechanism is the main characteristic of our country’s form of currency. During the period of interest rate controls, by adjusting the legal deposit reserve ratio affect the money multiplier, which affect the money supply; Loan Deposit Ratio limit using direction of commercial Banks money, which affect the money supply. During the period of interest rate marketization completely, the central bank can only by adjust the excess reserve interest rates to influence the money multiplier and money supply. The way of RMB issuing and China’s money supply influence and restrain each other, both closely relate to the RMB exchange rate, monetary market interest rates, long-term interest rates and term structure of interest rates.Second, the interest rate marketization is studied. From the narrow sense, interest rate marketization in our country is only key to the last step: completely let go of bank deposit rate limit. From the narrow sense, including stabling money market rates, dredging term conduction, raising interest rates in the role of monetary policy transmission channels and the central bank interest rate marketization. The Shanghai interbank offered rate(SHIBOR) has become China’s money market benchmark interest rate; Bond yields preliminary become medium and long-term interest rate benchmark interest rates; Reserve rate is relatively low and unchanged for a long time; Interest rates of central bank bills are higher than the same lever of bond yields. Central bank bill rates, open market short-term liquidity adjustment tool(SLO) rates, standing lending facilities(SLF) interest rate the central bank interest rates and money market rates maintain consistency synchronization, and the legal reserve rate, excess reserves rate, central bank interest rates, such refinancing rate, rediscount rate, and money market rates vary widely, synchronicity. Central bank interest rates should keep synchronous adjustment with money market rates, gradually close to the money market interest rates, in the end by denominated in money market interest rate, the central bank interest rate marketization.Third, to study the relationship between money supply way and the market interest rates. Both opening market operations issuing monetary base and adjusting reserve ratio determine the monetary market interest rates; currency supply and demand determine long-term interest rates and bond supply and demand; Abroad mainly through open market operations rather than adjust reserve requirements to influence short-term interest rates, there is not limit for commercial Banks to use the money in abroad, so the term is unimpeded, effective conduction; In our country through open market operations, and by adjusting the legal deposit reserve rate to influence short-term interest rates; LDR regulations in our country commercial bank shall not be more than 75%, this affects term conduction, affecting the medium and long-term interest rates. Financial institutions and the central bank together decided to main bond demand, decided to medium and long-term interest rates, deposit financial institutions play a role of relatively larger.Fourth, study the influence of the RMB issue way on interest rate marketization. Buying foreign exchange to issue currency distorted balance between currency supply and demand, lowered the deposit reserve rate, is not conducive to deposit and loaning interest rate marketization; RMB issuing mode is not conducive to the stability of the monetary market interest rate and the conduction of from short-term interest rates to medium and long-term interest rates; both RMB issuing way through purchase of foreign exchange and the regulations for the commercial bank loan deposit ratio lead to the abnormal phenomenon that short-term interest rates is higher than long-term interest rates for a long time. RMB exchange rate formation mechanism of central bank to buy foreign currency issuance, the central bank agents within the state Treasury on the balance sheet, legal reserve calculation period and holding period are using point method, the bank deposit loan ratio regulation, the M2 growth rate in late data statistics, shadow banking and hot money inflows are the root causes of the sharp fluctuations in monetary market instant interest rates in China; Central bank bills interest rates in the money market interest rates tender bidding and Treasury cash management of real-time transaction rates not only invalid, instead of negative effect; Stock lending facilities(SLF) and open market short-term liquidity adjustment tool(SLO) cannot be effectively ease monetary market interest rate excessively rising within a day or even within a week; Too low for a long time the excess deposit reserve rate increase fluctuate range of monetary market interest rates.Fifth, study impact fully market-oriented interest rate on RMB issue way. From the point of view of the reform and development, the national interbank lending overnight interest rates as a monetary policy rates is the inevitable choice. China’s monetary policy transmission channels are mainly composed of RMB exchange rate and credit loan, interest rate effect is small, the reason is that RMB exchange rate formation mechanism of the central bank to buy foreign currency issuance, the central bank to buy foreign exchange to make the effect of RMB exchange rate in the role of the monetary policy transmission special amplification; the central bank buying foreign exchange to Issuance of the monetary base make rapid money supply growth, prompting RMB credit increase rapidly, therefore, the effect of the credit in the role of the monetary policy transmission dash forward show; Besides, interest rate period conduction not unblocked, short-term interest rates are difficult to conduction to the medium and long-term interest rates, therefore, the effect of short-term market interest rates in the role of monetary policy transmission reduced. Overnight trading interest rate is necessary for monetary policy under the interest rate fully market-oriented interest rate; Based on stable money market rates, dredge term conduction, raise interest rates in the role of monetary policy transmission channels, the central bank interest rate marketization and the central bank’s assets risk management and capital constraints considerations, RMB issuing mode must be reformed to "give priority to buy bonds, central bank loans is complementary".