Research On Monetary Policy Transmission Through The Bill Market In China

As an important part of the money market, the bill market should have occupiedthe important position in the monetary policy transmission. However China’s billmarket started late and is lagging behind the development, which cause somedifficulties and obstacles to the central bank’s monetary policy operations andtransmission. Studying monetary policy transmission through the bill market in Chinasystematically has the strong practical significance regarding the opening monetarypolicy transmission channel and enhancing the transmission effect.This article begins with outlines the theoretical framework of monetary policytransmission in the bill market and summaries the practical process of monetarypolicy transmission in the China’s bill market. In the empirical research, this articledivides the monetary policy transmission through the bill market in China into twostages, namely, the internal system transmission in which the monetary policy impacton the bill market, and the external transmission in which the bill market impact onthe real economy, and reaches the conclution that the effect is not desirable. Theempirical studies of the internal system transmission have shown that, although themoney supply can have an impact on the bill market, but do not have the ability tocontrol the bill market yet; interest rates have the ability to control the bill market, butthe impact have a certain lag. The empirical studies of the external systemtransmission have shown that, the bill market do not have the ability to control theconsumption yet; the bill market has a certain ability to control the investment, butless effective. Finally, this article propose corresponding countermeasure suggestion,thus provide analysis train of thoughts and reference for further reform, development,and provide policy-making support for our central bank to implement more highlyeffective monetary policy operation.