The browser you are using is not supported by this website. All versions of Internet Explorer are no longer supported, either by us or Microsoft (read more here: https://www.microsoft.com/en-us/microsoft-365/windows/end-of-ie-support).

Please use a modern browser to fully experience our website, such as the newest versions of Edge, Chrome, Firefox or Safari etc.

The transition to market-based monetary policy: What can China learn from the European experience?

På svenska

Author

Summary, in English

We discuss the prospects for Chinese money market development and transition to market-based monetary policy operations based on a comparative historical analysis of the present Chinese situation and the development in 11 European countries from 1979 up to the launch of the European Economic and Monetary Union (EMU). Central banks in the latter group of countries typically had an incentive to encourage the formation of efficient benchmark segments in the domestic money markets for the conduct of open market operations as traditional quantity-oriented instruments became increasingly ineffective. China is displaying many of the same symptoms as the European countries in the 1970s and 1980s, including poor monetary transmission due to excess liquidity and conflicts of interest due to unclear priority among multiple policy goals.We conclude that in a number of aspects, current Chinese monetary policy operations are counter-productive to efforts to develop an efficient money market that can serve as arena for an effective market-based monetary policy, and provide policy recommendations.

Publishing year

2007

Language

English

Pages

257-283

Publication/Series

Journal of Asian Economics

Volume

18

Issue

2

Document type

Journal article

Publisher

Elsevier

Topic

  • Economics and Business

Keywords

  • Monetary policy operations
  • Money market
  • China
  • European Union
  • Deregulation

Status

Published

ISBN/ISSN/Other

  • ISSN: 1049-0078