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From Window Guidance to Interbank Rates: Tracing the Transition of Monetary Policy in Japan and China

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  • Stefan Angrick

    (Asian Development Bank Institute, National Graduate Institute for Policy Studies)

  • Naoyuki Yoshino

    (Asian Development Bank Institute, Keio University)

Abstract

Japanese monetary policy up to 1991 was based on a mix of price-based and quantity-based instruments and targets. Echoes of this system are today found in Chinese monetary policy. We explore the transition of these two regimes using historical statistics, computational text analysis, and structural vector autoregressive (SVAR) models. Specifically, we examine the role of the interbank rate and "window guidance," a policy by which authorities communicate target quotas for lending growth directly to commercial banks. We empirically demonstrate the declining effectiveness of quantity measures and the increasing importance of price measures and provide recommendations for managing this transition.

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  • Stefan Angrick & Naoyuki Yoshino, 2020. "From Window Guidance to Interbank Rates: Tracing the Transition of Monetary Policy in Japan and China," International Journal of Central Banking, International Journal of Central Banking, vol. 16(3), pages 279-316, June.
    • Handle: RePEc:ijc:ijcjou:y:2020:q:2:a:8
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    2. Guo, Shen & Lin, Guiting & Ouyang, Alice Y., 2023. "Are pro-SME credit policies effective? Evidence from shadow banking in China," Economic Modelling, Elsevier, vol. 119(C).

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    More about this item

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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