China monetary policy 2010-2011外文文献.docVIP

Financial institution: China part 2 1.1 Tools In China, there are two types of monetary policies. The first sort is the general monetary policy tools, which are the so-called open market operation, discount policy and reserve requirement. Another part is the selective monetary policy tools, which includes three methods. The first method is indirect credit monetary control tools such as prime rate, control on consumer credit and real estate. The second approach is direct credit control which means to set the maximum amount of loans and the ceiling of interest rate. The third one can be described as moral persuasion, which is often conducted as advice provided by the government. 1.2 Goals There are four major goals of the monetary policy namely economic growth, create more jobs, stabilize prices and maintain balance of international payments. At present the main goal in China is to stabilize the price level, especially to control the inflation. 1.3 Targets The setting of targets is an approach which to conform the terminal targets, the goals, can be effectively achieved. It is a bridge to connect the monetary tools with the goals and can be divided into two procedures, the operating targets and the intermediate targets. 2. Application in China from 2010-2011 After the brief introduction of the three parts, the following essay will analysis the monetary policy in China from 2010 to 2011, focusing on the content of the three elements and the mechanism of the transformation and the efficiency of the policy. To moderate inflation, the reserve requirement and the open market operation are the main monetary policy tools applied in China from 2010 to 2011. During this period, the Peoples Bank of China (PBOC) has raised the deposit reserve rate by 0.5 percent for twelve times. By June 14th 2011, the deposit reserve rate has reached 21.5% and 19.5% for large finance institutions and middle-and-small institutions respectively. Refer to the open market operation, treasure no