Ljungwall, Christer () (China Economic Research Center) Xiong, Yi () (Peking University National School of Development, China Center for Economic Research) Zou, Yutong () (Peking University National School of Development, China Center for Economic Research)
Abstract
This paper investigates the current monetary policy regime of China’s Central Bank, the People’s Bank of China (PBoC). This is done from the specific viewpoint of PBoC financial strength and the cost of its monetary policy instruments. The result shows that PBoC is constrained by the costs of its monetary policy instruments. PBoC tend to use less costly but market-distorting instruments such as deposit interest rate cap and reserve-ratio requirements, rather than more market-oriented but more costly instruments such as central bank note issuance. These costs remain under control today, but may rise in the future as PBoC accumulates more foreign assets. This, in turn, will jeopardize the Chinese monetary authority’s capability to maintain price stability.
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Publisher Info
Paper provided by China Economic Research Center, Stockholm School of Economics in its series Working Paper Series with number
2009-8.
Length: 30 pages Date of creation: 01 May 2009 Date of revision: Handle: RePEc:hhs:hacerc:2009-008
Contact details of provider: Postal: China, Economic Research Center, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden Phone: +46-8-736 90 00 Fax: +46-8-31 81 86 Web page: http://www.hhs.se/CERC/ More information through EDIRC
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Find related papers by JEL classification: E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers 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 E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
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