A framework for independent monetary policy in China / Marvin Goodfriend and Eswar Prasad.
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...
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Full Text (via ProQuest) |
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| Main Authors: | , |
| Corporate Author: | |
| Format: | eBook |
| Language: | English |
| Published: |
[Washington, D.C.] :
International Monetary Fund, African Dept.,
©2006.
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| Series: | IMF working paper ;
WP/06/111. |
| Subjects: |
| Summary: | 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. |
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| Physical Description: | 1 online resource (50 pages) : illustrations. |
| Bibliography: | Includes bibliographical references. |
| ISBN: | 1283513900 9781283513906 9781451909050 1451909055 1462359892 9781462359899 1452713820 9781452713823 9786613826350 6613826359 |
| ISSN: | 2227-8885 ; |