China: Strengthening Monetary Policy Implementation

January 1, 2007

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Format: Chicago

Bernard J Laurens, and Rodolfo Maino. China: Strengthening Monetary Policy Implementation, (USA: International Monetary Fund, 2007) accessed November 24, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The People's Bank of China (PBC) has made great strides in modernizing its monetary policy frameworks but their effectiveness will diminish as the sophistication of the economy increases. Empirical evidence supports maintaining a reference to money in China's monetary strategy and enhancing the role of interest rates in its conduct. We advocate adoption of an eclectic strategy involving the monitoring of several indicators, and of a short-term interest rate as the operational target. The PBC should be granted discretion to change its policy rate, and there are no technical obstacles for such a move to occur in the near future.

Subject: Bank credit, Banking, Inflation, Monetary base, Money markets

Keywords: Banking sector, Excess reserves, Foreign exchange, Inflation targeting, Interbank market, Money supply, WP

Publication Details

Pages:

51
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2007/014
Stock No:

WPIEA2007014
ISBN:

9781451865783
ISSN:

1018-5941

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