Chinese Monetary Policy Transmission Mechanism And Its Efficiency

From 1998 to now , the sane monetary policy being carried out in our country has played an important role in promoting economy growth , while there is a long distance from the effect of monetary policy to its target of changing disinflation and enlarging domestic demand .Although there are many reasons , a key reason is that monetary policy transmission mechanism is not smooth .The paper discussed mainly the factors that restrict our country monetary policy transmission mechanism and put forth the corresponding innovation measures.Firstly the article introduced the theories of monetary policy transmission mechanism and transmission channels in west countries , then analyzed the preconditions that the transmission channels depended on ,including perfect market system ,interest rate being decided by market ,fully moving of information and coordination between relevant economic policies ,and so on .Secondly the paper summed up the process of monetary policy transmission mechanism being established and all the reformation measures in our country from 1998 to now .It also analyzed the present monetary policy framework and the main transmission channels being depend on in our country and compared the monetary policy transmission mechanism of our country with those of the west countries .the main differences embodied the different macroeconomic conditions that monetary policy transmission channels depended on .west countries have a relatively perfect market mechanism while in our country the socialism market mechanism is imperfect.Furthermore , based on the essential analysis of the efficiency about present monetary policy transmission mechanism in our country ,the paper analyzed the factors which restrict monetary policy transmission in our country mainly from the credit market ,stock market and the coordination of relevant policies .In view of credit market ,the ability to control the number of money supply by the center bank ,the sensitivity reacted by the commercial bank enterprises and residents to the monetary policy ,the credibility between the commercial banks and the enterprises ,all these exist problems .In point of the stock market ,its function defect ,abnormal management ,small scale and manly division of the stock market ,these are all the unfavorable factors which restrict monetary policy transmitted by the stock market in our country .From the angle of the coordination of relevant policies ,there also exist some contradictions among monetary policies ,financial policies , financial supervision .distribution of GNP and other economic policies .Lastly ,this article put forth that the reformation target of monetary policy transmission mechanism in our country is to set up the sensitive and effective monetary policy transmission mechanism from the center bank to monetary market to financial institutions ,and then to the enterprises and residents.the concretereformation methods include the following four aspects :The first method is to rebuild the monetary policy framework of our country .The second method is to unclog our current monetary policy transmission channel .The third method is to engage in the further reformation of interest rate being decided by market and gradually build the channel of monetary policies being transmitting by the stock market .the fourth method is to coordinate the monetary policy and other relevant economic policies .