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The Road to a Market-Oriented Monetary Policy and the “New Normal” Monetary Policy Regime in China

Author

Listed:
  • Laura Komlóssy

    (Magyar Nemzeti Bank)

  • Gyöngyi Körmendi

    (Magyar Nemzeti Bank)

  • Sándor Ladányi

    (Magyar Nemzeti Bank)

Abstract

Over the past decades, China has implemented a series of economic reforms, as a result of which it progressed in successive stages from a centrally planned economy system to a market economy system. As part of this process, both the framework and the toolbox of monetary policy changed in line with the prevailing economic systems. Our paper describes this evolution from the emergence of the two-tier banking system onwards, with particular focus on the post-2008 reform process, which involved the establishment of the current framework operating within the “New Normal”. This new framework copies a number of monetary policy elements commonly occurring in developed market economies, while it also has unique characteristics that reflect the specific features of the country. On the one hand, these bear the marks of earlier monetary policy regimes, while on the other hand, they may also be conceived of as means of adapting to new challenges: certain tools which previously were of a purely monetary policy nature have taken on a new meaning within China’s new economic system as tools of macroprudential policy, a new area emerging in the aftermath of the crisis of 2007–2008.

Suggested Citation

  • Laura Komlóssy & Gyöngyi Körmendi & Sándor Ladányi, 2017. "The Road to a Market-Oriented Monetary Policy and the “New Normal” Monetary Policy Regime in China," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 16(Sepcial I), pages 101-125.
    • Handle: RePEc:mnb:finrev:v:16:y:2017:i:specialissue:p:101-125
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    monetary policy toolbox; macroprudential policy; China; “New Normal”; People’s Bank of China;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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