China's Monetary Policy Intermediate Target And Its Vision Analysis

As primary ingredient of monetary policy, the intermediate target is of vital importance for monetary policy transmission mechanism. The effectiveness of monetary policy is determined, to a great degree, by the expediency or effectiveness of intermediate target. So, monetary authority's right choice of intermediate target will facilitate the realization of monetary policy ultimate targets.In the middle of 1990s, according to the macro economy, the monetary policy intermediate target in china was gradually transmitted from credit scale to money supply. People's bank of china tried to integrate money supply to monitory policy intermediate target system in 1995, and officially set it up in 1996. In the following over ten years'operation, the monetary policy, figuring money supply as its intermediate target, yielded some results, while exposed obvious limitation. Hence, it attracts great attention whether money supply is still suitable as intermediate target.This thesis, based on reviewing the history that monetary policy transmission mechanism and intermediate target developed in china, analyzes the various problems in our current monetary policy transmission mechanism and choosing our intermediate target. According to the experiences and lessons we can learn from the USA, it points out the possible monetary policy intermediate target china can choose in future, and provides comparing and feasibility proofs for them.It is proved in this thesis that, in the current economic situation, interest rate can not function as our minatory policy intermediate target, and it is our inevitable choice to maintain money supply as intermediate target. However, it is our necessary path in monetary policy intermediate target in the several coming years that we should adjust the intermediate target from the current money supply in narrow sense, M1, to the one in broad sense, M2. Meanwhile, we should monitor M1, credit scale, interbank offered rate, exchange rates, and other financial index. To complete the monetary policy transmission system figuring money supply as intermediate target, we should firstly perfect the statistics methods for money supply, establish a feasible and practical inflation target, ensure the independency of the central bank, and pay attention to public expectation.