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

Laura Komlóssy (), Gyöngyi Körmendi () and Sándor Ladányi ()
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Laura Komlóssy: Magyar Nemzeti Bank
Gyöngyi Körmendi: Magyar Nemzeti Bank
Sándor Ladányi: Magyar Nemzeti Bank

Financial and Economic Review, 2017, vol. 16, issue Sepcial Issue, 101–125

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.

Keywords: monetary policy toolbox; macroprudential policy; China; “New Normal”; People’s Bank of China (search for similar items in EconPapers)
JEL-codes: E42 N15 (search for similar items in EconPapers)
Date: 2017
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