Monetary Policy Needs to Keep up with the Times

LI Jian ( 李健 )
Professor, Central University of Finance and Economics

Editorial note:

In the Chinese financial system, the regulatory role of monetary supply far surpasses that of interest rate regulation. However, the fast growth of China’s monetary supply has not yet brought inflationary pressure. The author maintains that the money function has shifted to an assets function, therefore, the key factor in maintaining supply and demand equilibrium in monetary supply has changed from the supply side to the demand side. Thus the focus of government regulation and control should also be adapted to ensure an equal emphasis on both monetary aggregate amount and monetary structure.

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