A Study On Effectiveness Of China's Monetary Policy

The develop of economy was taken something more and more seriously by all the countries as sign of a country's develop and promotion of strength. In order to promote development of the economy, monetary policy has become the focus of widespread concern. That whether the monetary policy can be effective and how to make the monetary policy more effective are core and front discussed in theory and core government departments.Since 2007, financial crisis sweep the globe. In response to the crisis fed, central banks in Europe and Japan inject funds many times Fed, central banks in Europe and Japan many times over funding bailout in order to prevent the expansion and spread of financial crises. With the shortage of liquidity in the money market and the financial crisis worsen, various corresponding measures are rolled out. In the volatile market environment, China's monetary policy implementation and effectiveness cause more concern and discussion.This article start from the nature of money and the money supply, analyzing basis theoretical and development of monetary neutrality and non-neutral and the money supply endogenous and exogenous. It describes the play of monetary policy effectiveness in different countries by combination of the different market conditions in different countries. From policy implementers (central bank) to the monetary policy objective in itself then to the effectiveness of monetary policy, the money plays an important role to policy effectiveness. And it studies the validity of monetary policy comprehensively. The article is more theoretical by focusing on the nature of monetary. In combination with monetary policy and market environment, using quantitative analysis method, analyzing the monetary policy since 1998, it is conclusion that the Chinese currency is non-neutral and the money supply is some endogenous. The monetary policy is effective in China.Empirical test also found that the effectiveness of monetary policy in China should be improved. China is in the period of transition, and particular economic environment had an impact on the effectiveness of monetary. Monetary transmission mechanism and the choices of monetary policy objectives are closely related to the effectiveness of monetary policy. To promote the effective implementation of monetary policy in China, it should improve the market environment of monetary policy, clear the monetary policy transmission mechanism vigorously; improve the market environment of the credit channel and capital markets; speed up the interest rate reform, improve the RMB exchange rate mechanism; focus on monetary policy eventually balance and harmony between the objectives, selecting intermediate goals; strengthen monetary policy coordination with other policies to promote and complement the effectiveness of monetary policy.