- Additional Authors
- Description
- 51 p.; 21 x 29.7cm.
- Summary
- As a result of reforms and financial sector development, the People's Bank of China (PBoC) now exerts significant control over money market interest rates. With money market conditions increasingly influencing effective commercial lending rates, the PBoC is also able to affect the cost of credit without recourse to its benchmark commercial bank rates. Furthermore, interest rates are an important determinant of investment spending in China, via the user cost of capital, and aggregate economic activity influences inflation. Hence, greater use of interest rates in implementing monetary policy would enhance macroeconomic stabilisation while avoiding a number of drawbacks of the current quantity-based approach. In addition, increased flexibility in the exchange rate would enhance its role in offsetting macroeconomic shocks and allow the PBoC more scope to tailor monetary policy to domestic macroeconomic conditions. Concurrently, changes in the PBoC's policy stance should be predicated on informed judgments based on the monitoring of a set of indicators in conjunction with a flexible inflation objective as the nominal anchor. This paper relates to the 2010 OECD Economic Review of China (www.oecd.org/eco/surveys/china).
- Series Statement
- OECD Economics Department Working Papers, 1815-1973 ; no.822
- Uniform Title
- OECD Economics Department Working Papers, no.822.
- Subject
- LCCN
- 10.1787/5km32vmsq6f2-en
- OCLC
- oecd-lib-001533
- Author
Conway, Paul.
- Title
Reforming China's Monetary Policy Framework to Meet Domestic Objectives [electronic resource] / Paul Conway, Richard Herd and Thomas Chalaux
- Imprint
Paris : OECD Publishing, 2010.
- Series
OECD Economics Department Working Papers, 1815-1973 ; no.822
OECD Economics Department Working Papers, 1815-1973 ; no.822.
- Connect to:
- Indexed Term
Economics
China, People's Republic
- Added Author
Herd, Richard.
Chalaux, Thomas.
- Other Standard Identifier
10.1787/5km32vmsq6f2-en doi