1. Monetary policy objectives: China's monetary policy objectives mainly include maintaining monetary stability, promoting economic growth, maintaining employment level, maintaining balance of payments, and supporting financial stability and financial market development.
2. Monetary policy tools: The People's Bank of China implements monetary policy through a series of monetary policy tools, mainly including:
-Deposit reserve ratio: This is the ratio of the reserves that the People's Bank of China requires commercial banks and other financial institutions to hold to their total deposits. By adjusting the deposit reserve ratio, the central bank can affect the credit expansion ability of financial institutions, thus affecting the money supply and interest rate level.
-Open market operation: The People's Bank of China buys and sells treasury bonds, central bank bills and other securities in the open market, and adjusts the money supply and interest rates.
-Benchmark interest rate: This is a key interest rate set by the People's Bank of China, including deposit benchmark interest rate and loan benchmark interest rate. Adjusting the benchmark interest rate can affect the interest rate level of the whole financial market, and then affect the borrowing costs and investment decisions of enterprises and individuals.
-Refinancing and rediscounting: The People's Bank of China supports commercial banks and other financial institutions by providing them with refinancing and rediscounting, thus affecting the money supply and interest rate level.
3. Monetary policy cycle: China's monetary policy is also cyclical, that is, it adopts a tightening policy during the economic boom and an expanding policy during the economic recession. For example, during the economic boom, the People's Bank of China may raise the deposit reserve ratio, raise the benchmark interest rate or reduce refinancing and rediscount to curb inflation and asset bubbles. During the economic recession, the People's Bank of China may lower the deposit reserve ratio, lower the benchmark interest rate or increase refinancing and rediscount to stimulate economic growth and employment.
It should be noted that China's monetary policy is not only influenced by the domestic economic situation, but also by the global economic and financial markets. Therefore, when formulating and implementing monetary policy, the People's Bank of China needs to fully consider the domestic and international economic situation and formulate a monetary policy suitable for the current economic situation.