| Since2006, China has totally adjusted the statutory reserve ratio for38times, which shows that the statutory reserve requirement has become an important tool of macroeconomic regulation and control in China. The statutory reserve requirement is one of the three magic weapons of China’s monetary policy, by adjusting the size of credit and the money supply to affect the economic operation. It’s known as an axe of economic adjustment for its high strength and the violent effect. In this paper, on the basis of the background of previous adjustments, to sum up the specific reasons for China’s frequent use of the statutory reserve ratio and then through VAR model, Johansen test, Grainger causality test, to analyze the effect on the broad money supply and judge the effectiveness of this policy. Finally, several relevant policy suggestions will be recommended. |
