| Monetary policy which was used as a very important instrument in making the stability of currency and improving the macroeconomy had became popularity in the world since 1960's.The main functions of monetary policy include adjusting the behaviour of real economy during the equilibrium by special instruments of fmance,raising the rate of growth.However,with the development of financial innovation,great changes have taken place in the whole financial system,the way of financial organization,the relation between currency and macroeconomy ,etc.These changes have made the operation of conventional monetary policy lose its theoretical foundation and premise,so the effect of monetary policy on real economy has weakened.Therefore, the developed countries gradually shift their target which aimed at interest rate or money supply into the target of inflation in the late of 1980's,this new phenomenon bring informations and experiences to the developing countires during their fiancial innovation.China has entered into WTO,so international markets and domestic markets will become more and more integration.Actiities in international and domestic ininovation have more and more affected our country's monetary policy.Under such new circumstances,research on the direction of our country's monetary policy during fiancial innovation will have a very important meaning in reinforcing the role of PBC (The People's Bank of China) during the course of adjusting macroeconomy.This dissertation has five parts.The first part introduces the nature and meaning of financial innovation at the begining,then explains what are the effects towards monetary policy.I think that there are mainly three aspects,the first is that financialinnovation affects the demmand of money;the second is that financial innovationaffects the supply of money;the last one is that financial innovation affects the operation of policy.In the .second part,I distinguish two kinds of meaning in explainning the effectiveness of monetary policy and analyse the outcome of our country's policy in quantity.I set up mathematical model by using the method of Granger Causality in order to deside whether the supply of money is the cause of the variation of economy,and to determine the degree of the effect during the change of money supplyin different terms.In the third part,I find that financial innovation leads to the variation of money is the main cause of the weakened monetary policy through studying our. country's demand for money.So I point out that the selection for the financial varibles which was used as the monetary intermediary target will be the key to the development of the future monetary policy.In the forth part, I analyse the change of monetary intermediary target in developed country and the problem of operating policy in our country.Then I argue that we should revise the intermediary target including gradually giving up themonetary quantity supplied and shifting into the control of inflation. We also shouldt settle a series of problems such as the independence and credibility of The People'sBank of.China,the target in the operation of monetary policy,the range of inflation.The last part draw a conclusion: 1st,we should set up the monetary innovation and adjustment mechanism; 2nd,we should make sure the independence of monetary policy;3rd,we should aim at only one last target and change the monetary intermediary target in a flexible way;4th,we should speed up the pace of market oriented economy;5th,we should reform the enviroment of policy,etc. |
