An Empirical Study On The Effect Of China Money Market In Monetary Policy Transmission

How to effectively implement the monetary policy is object that the world monetary authorities seek to achieve. Through which channel monetary policy act on the real variables that has long been hotly studied and discussed by scholars .China's reform of monetary system is essentially a process of decentralization of power and transfer of profits to financial institutions and non-financial institutions which constitute a micro-economic. The main evolution of micro-economic body provide title base to the monetary policy for the feedback ,as a result, the decision of the Chinese currency to the market as a medium of indirect regulation and control, conduction of monetary policy particularity.In this paper with monetary policy channels to be the main line, from our macroeconomic control and regulation of monetary policy which leads to the undesirable effect of China's monetary policy.The main reason is monetary policy transmit channels sluggishly. The reasons that impact the effects of China's monetary policy transmission has been summarized and analyzed, at the same time research and analysis on domestic and international monetary policy transmission mechanism , use for reference Blinder and Bernanke (1992) empirical use of the federal interest rate ,with inter bank interest rate and the inter-bank bond market interest rate as assumptions for the market ruling rate of interest empirical study on the effect of the money market in monetary policy transmit,choose a representative of several variables under the assumption that the non-neutrality of money establish VEC and VAR model on the inter bank loan market and the inter-bank bond market in the empirical testing, currency market variables come to a long-term supply of money and the GDP has sustained and effective impact. But China's monetary market due to the evolution of the financial system process behind the market changes in the economic system and the macro-control mode changes in the money market and balanced development of market participants, lack of money market instruments, and the interest rates have not yet fully market-oriented monetary policy make an ineffective transmission. It is a feasibility proposal in promoting China's monetary market system in the balanced development with the capital market and to enhance the interaction improve the financial system and abundant money market transactions tools, diversified transaction object, accelerating and the currency market corresponding to the financial reforms. Strengthening of the country's currency market on the monetary policy transmission.