China’s Monetary Policy Target Selection Under The Macro Prudential Regulation Framework

The global financial crisis happened in2008has brought the unprecedented impact on national economy and raised comprehensive reflection by economies to the financial regulatory system. Under macro-prudential regulatory framework in the post-crisis era. the issues that China’s monetary policy how to adapt to the changes of the times and provide a good guarantee for the healthy development of the economic system has caused widespread attention by scholars. The reselection problem of monetary policy goal has become the key role to solve the above problems.What’s more, the problem has extremely profound influence and great significance to monetary policy implementation effect as well as the stability of the financial system development.Based on widely collecting, carding and researching on the related literature at home and abroad, firstly, this paper introduces the meaning of the macro-prudential regulation, the central bank and monetary policy separately and analyzes the relationship among them. Paper holds that the central bank should take the role of macro-prudential supervision body and monetary policy should be a good supplement in order to maintain price and financial stability of the economy system. Secondly, the paper gives explicit explanations on the target of monetary policy theory laying a solid theoretical basis for the target selection of monetary policy and argues that monetary policy should be regulated properly according to the changes of economic environment and constraint conditions.Besides, by analyzing the development and changes of different monetary policy goals in different periods of our country, paper puts the different period of monetary policy goals and economic environment organically together and points out the current existing problems and the limitations of monetary policy goals in the changes of the post-crisis financial and economic environment in our country.Through theoretical analysis on the optimal selection of monetary policy objectives, paper holds that the best solution is considering both price stability and financial stability together. Thirdly, the paper revises the monetary policy objective function based on the double stable target。 establishes the appropriate financial stability index system, uses VAR model to validate the control ability of monetary policy to financial stability standards as well as the correlation between them, and puts forward the flexible use of monetary policy targets in order to achieve price stability and financial stability in different era. Finally, on the basis of summarizing the research conclusion, paper puts forward the related policy suggestions and points out the contribution and the deficiency existing in this paper research.