Four objectives of monetary policy

1, stabilize prices

Stabilizing prices is a relative concept, that is, controlling inflation so that the overall price level will not fluctuate greatly in a short time. To measure the stability of prices, there are three commonly used indicators according to the situation of each country:

One is the GNP (Gross National Product) average index, which takes the final products and services that constitute the gross national product as the object and reflects the price changes of the final products and services.

Second, the consumer price index, which takes consumers' daily living expenses as the object, can accurately reflect the changes in the consumer price level.

The third is the wholesale price index, which is aimed at wholesale transactions and can accurately reflect the price changes of bulk wholesale transactions. It should be noted that apart from inflation, there are still some factors within the normal range.

The determination of this boundary varies from country to country, mainly depending on the economic development of each country. In addition, traditional habits also have a great influence.

2. Full employment

The goal of full employment is to maintain a high and stable level. With full employment, anyone who is able and willing to take part in the work can find a suitable job at any time under more reasonable conditions.

Full employment refers to the utilization degree of all available resources. However, it is very difficult to measure the utilization of various economic resources. Generally, the employment degree of the labor force is taken as the benchmark, that is, the unemployment rate index is used to measure the employment degree of the labor force.

The so-called unemployment rate refers to the ratio of the number of unemployed people in society to the number of laborers who are willing to work. The unemployment rate also represents the degree of full employment in society. Theoretically speaking, unemployment is a waste of production resources. The higher the unemployment rate, the more unfavorable it is to social and economic growth. Therefore, all countries try to reduce the unemployment rate to the lowest level in order to achieve their economic growth goals.

3. Economic growth

The so-called economic growth means that the growth of gross national product must maintain a reasonable high speed. The index to measure the economic growth of countries generally adopts the annual growth rate of per capita real GNP, that is, the annual growth rate of per capita real GNP after deducting the price increase rate. Generally, the government will set an index for the actual GNP growth rate in the planned period, expressed as a percentage, and the central bank will take this as the goal of monetary policy.

Of course, the reasonable economic growth needs the cooperation of many factors, and the most important thing is to increase various economic resources, such as manpower, financial resources and material resources, and realize the optimal allocation of various economic resources. As the competent monetary department in the national economy, the central bank directly affects the financial part of the national economy and plays a huge role in the supply and distribution of funds.

Therefore, the central bank's goal of economic growth means that the central bank combines and coordinates the use of resources through the tools it can manipulate under the premise of accepting the established goals. Generally speaking, the central bank can increase investment by increasing the money supply or lowering the real interest rate; Or by controlling the inflation rate, to eliminate the impact of uncertainty and page effect on investment.

4. Balance of payments

The so-called balance of payments goal, in short, is to take various measures to correct the balance of payments and make it tend to balance.

Because a country's balance of payments is unbalanced, whether it is a surplus or a deficit, it will have an adverse impact on its economy. Long-term huge deficit will make its foreign exchange reserves drop sharply and bear heavy debt and interest burden; However, the huge surplus for a long time will waste the use of domestic resources, leaving some foreign exchange idle, especially the issuance of domestic currency due to a large number of foreign exchange purchases, which may cause or aggravate domestic inflation. Of course, in contrast, the deficit is particularly harmful, so countries generally focus on reducing or even eliminating the deficit when adjusting the imbalance of international payments.

Judging from the establishment of the balance of payments goals of various countries, it is generally related to the problems existing in the country's balance of payments. At first, the United States did not regard the balance of payments as a policy goal. Until the early 1960s, the United States had a long-term balance of payments deficit. 1969- 197 1 3 years, the balance of payments deficit accumulated to 40 billion dollars, and the gold reserves were greatly lost. At this time, balancing the balance of payments has become the fourth goal of monetary policy.