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The evolution of China's monetary policy: on the horns of a dilemma

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  • Ramaa Vasudevan

    (Colorado State University, Fort Collins, CO, USA)

Abstract

This paper explores the evolution of monetary policy at the People's Bank of China (PBoC) in the context of the distinct path China has adopted in fostering the international role of the renminbi. The paper highlights the challenges faced by the PBoC as it seeks to promote the use of the renminbi in international lending in particular, while simultaneously seeking to contain and discipline the inherent instability and potentially disruptive logic of finance. The problem it faces is not simply that of negotiating the impossible trinity, but rather the dilemma posed by its attempt to step out of the shadow of the US and forge an independent global role for the renminbi, while asserting control over the contours of its developing financial sector. The Chinese experiment tests the limits of the capacity of the state to tame finance.

Suggested Citation

  • Ramaa Vasudevan, 2021. "The evolution of China's monetary policy: on the horns of a dilemma," Review of Keynesian Economics, Edward Elgar Publishing, vol. 9(1), pages 83-108, January.
    • Handle: RePEc:elg:rokejn:v:9:y:2021:i:1:p83-108
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    More about this item

    Keywords

    China; monetary policy; internationalization of renminbi; impossible trinity;
    All these keywords.

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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