China’s Monetary Policy Communication: Frameworks, Impact, and Recommendations
Title | China’s Monetary Policy Communication: Frameworks, Impact, and Recommendations PDF eBook |
Author | Michael McMahon |
Publisher | International Monetary Fund |
Pages | 32 |
Release | 2018-11-16 |
Genre | Business & Economics |
ISBN | 1484385640 |
Financial markets are eager for any signal of monetary policy from the People’s Bank of China (PBC). The importance of effective monetary policy communication will only increase as China continues to liberalize its financial system and open its economy. This paper discusses the country’s unique institutional setup and empirically analyzes the impact on financial markets of the PBC’s main communication channels, including a novel communication channel. The results suggest that there has been significant progress but that PBC communication is still evolving toward the level of other major economies. The paper recommends medium-term policy reforms and reforms that can be adopted quickly.
Monetary Policy Transmission and Policy Coordination in China
Title | Monetary Policy Transmission and Policy Coordination in China PDF eBook |
Author | Miss Sonali Das |
Publisher | International Monetary Fund |
Pages | 40 |
Release | 2022-04-29 |
Genre | Business & Economics |
ISBN |
We study the transmission of conventional monetary policy in China, focusing on the interaction between monetary and fiscal policy given the unique institutional set-up for macroeconomic policy making. Our results suggest some progress but also continued difficulties in the transmission of monetary policy. Similar to recent studies, we find evidence of monetary policy pass-through to interest rates. However, the impact of monetary policy measures that are not coordinated with fiscal policy is significantly weaker than that of coordinated measures. This suggests the need for further improvements to the interest-rate based framework.
China’s Monetary Policy Communication: Frameworks, Impact, and Recommendations
Title | China’s Monetary Policy Communication: Frameworks, Impact, and Recommendations PDF eBook |
Author | Michael McMahon |
Publisher | International Monetary Fund |
Pages | 32 |
Release | 2018-11-16 |
Genre | Business & Economics |
ISBN | 1484385918 |
Financial markets are eager for any signal of monetary policy from the People’s Bank of China (PBC). The importance of effective monetary policy communication will only increase as China continues to liberalize its financial system and open its economy. This paper discusses the country’s unique institutional setup and empirically analyzes the impact on financial markets of the PBC’s main communication channels, including a novel communication channel. The results suggest that there has been significant progress but that PBC communication is still evolving toward the level of other major economies. The paper recommends medium-term policy reforms and reforms that can be adopted quickly.
A Framework for Independent Monetary Policy in China
Title | A Framework for Independent Monetary Policy in China PDF eBook |
Author | Marvin Goodfriend |
Publisher | International Monetary Fund |
Pages | 56 |
Release | 2006-05 |
Genre | Business & Economics |
ISBN |
As China's economy becomes more market based and continues its rapid integration into the global economy, having an independent and effective monetary policy regime oriented to domestic objectives will become increasingly important. Employing modern principles of monetary policy in light of the current state of China's financial institutions, we motivate and present a package of proposals to guide the operation of a new monetary policy regime. Specifically, we recommend an explicit low long-run inflation objective, operational independence for the People's Bank of China (PBC) with formal strategic guidance from the government, and a minimal set of financial sector reforms (to make the Chinese banking system robust against interest rate fluctuations). We argue that anchoring monetary policy with an explicit inflation objective would be the most reliable way for the PBC to tie down inflation expectations, and thereby enable monetary policy to make the best contribution to macroeconomic and financial stability, as well as economic growth. The management and monitoring of money (and credit) growth by the PBC would continue to play a useful role in the stabilization of inflation, but a money target would not constitute a good stand-alone nominal anchor.
The Future of China's Bond Market
Title | The Future of China's Bond Market PDF eBook |
Author | Mr. Alfred Schipke |
Publisher | International Monetary Fund |
Pages | 52 |
Release | 2019-03-13 |
Genre | Business & Economics |
ISBN | 151358278X |
China’s bond market is destined to play an increasingly important role, both at home and abroad. And the inclusion of the country’s bonds in global indexes will be a milestone for its financial market integration, bringing big opportunities as well as challenges for policymakers and investors alike. This calls for a good understanding of China’s bond market structure, its unique characteristics, and areas where reforms are needed. This volume comprehensively analyzes the different segments of China’s bond market, from sovereign, policy bank, and credit bonds, to the rapidly growing local government bond market. It also covers bond futures, green bonds, and asset-backed securities, as well as China’s offshore market, which has played a major role in onshore market development.
A Framework for Independent Monetary Policy in China
Title | A Framework for Independent Monetary Policy in China PDF eBook |
Author | Marvin Goodfriend |
Publisher | |
Pages | |
Release | 2010 |
Genre | |
ISBN |
As the Chinese economy becomes more market based and continues its rapid integration into the global economy, having an independent and effective monetary policy regime oriented to domestic objectives will become increasingly important. Employing modern principles of monetary policy in light of the current state of China's financial institutions, we motivate and present a package of proposals to guide the operation of a new monetary policy regime. Specifically, we recommend an explicit low long-run inflation objective, operational independence for the People's Bank of China (PBC) with formal strategic guidance from the government, and a minimal set of financial sector reforms (to make the Chinese banking system robust against interest rate fluctuations). We argue that anchoring monetary policy with an explicit inflation objective would be the most reliable way for the PBC to tie down inflation expectations, and thereby enable monetary policy to make the best contribution to macroeconomic and financial stability, as well as economic growth. The management and monitoring of money (and credit) growth by the PBC would continue to play a useful role in the stabilization of inflation, but a money target would not constitute a good stand-alone nominal anchor.
China’s Monetary Policy and Interest Rate Liberalization
Title | China’s Monetary Policy and Interest Rate Liberalization PDF eBook |
Author | Wei Liao |
Publisher | International Monetary Fund |
Pages | 24 |
Release | 2014-05-01 |
Genre | Business & Economics |
ISBN | 1484366298 |
China has been moving to a more market oriented financial system, which has implications for the monetary policy environment. The paper investigates the stability of the money demand function (MDF) in light of progress in financial sector reforms that, for example, have resulted in significant financial innovation (so-called shadow banking) and more liberalized interest rates. The analysis of international experience suggests that rapid development of the financial system often leads to structural shifts in the MDF. For example, financial innovation and liberalization alter the sensitivity of money balances to income and the interest rate. For China, we find that the stable long-run relationship between money demand, output, and interest rates that existed between 2002 and 2008 disappears after 2008. This coincides with the period of rapid financial innovation, especially the growth in off-balance sheet and nonbank financial intermediation. The results suggest that usefulness of M2 as an intermediate monetary target has declined with financial innovation and reform. A result that underscores the importance of moving toward increased reliance on more price-based targets such as interest rates.