An open economy in the sense of economics refers to a country's economic exchanges with foreign countries, such as international trade and financial exchanges, that is, foreign import and export, currency and capital exchanges, and there is a close relationship between its own economy and foreign economies, that is, an open economy.

Policy operation

The influence of open economy on the operation of China's monetary policy is mainly manifested in the following aspects: (1) the independence of monetary policy is restricted; The endogeneity of money supply is enhanced; Lack of effective monetary policy tools; The mechanism of monetary policy has changed.

Independence is limited.

After the exchange rate from 65438 to 0994 was merged, China's exchange rate system was declared as a single and managed floating exchange rate system based on market supply and demand. But from the practical point of view, China's RMB exchange rate is actually a fixed exchange rate system pegged to the US dollar. This exchange rate system reduces the independence of China's monetary policy to a certain extent, especially in the macro impact that may be brought about by the inconsistency between China's economic cycle fluctuation and that of the United States. With the upward trend of the American economy and the continuous appreciation of the US dollar, the RMB will appreciate correspondingly in the international market, and the international competitiveness of foreign trade exports will be affected. If China's domestic economy is still in the downward stage of economic fluctuation caused by insufficient domestic demand, the decline of external demand and insufficient domestic demand will inevitably aggravate the difficulty of macro-control, and the central bank's policy of stimulating the economy will also increase the pressure of currency depreciation to a certain extent. This is the main problem faced by monetary policy after the economy entered the tightening period from 65438 to 0997.

Meanwhile, the independence of interest rate adjustment is limited. Since 1994, although the existence of foreign exchange control has restrained the inflow of short-term capital to a certain extent, under the domestic policy environment of macro-tightening and maintaining high interest rates, the spread between domestic and foreign countries tends to widen, and the inflow of international capital through various channels offsets the policy objectives that domestic monetary policy tries to achieve to a certain extent, significantly reducing the effectiveness of domestic monetary policy. When making interest rate policy decisions, the central bank is forced to pay more and more attention to the interest rate trend of international currencies, especially the US dollar, and strive to maintain a moderate spread relationship between RMB interest rate and US dollar interest rate when adjusting interest rates. Since 1998, the central bank has continuously lowered the RMB interest rate, but the US dollar interest rate has invisibly become a limit and an important restrictive factor for the RMB interest rate reduction. 199818In February, the United States announced a rate cut, which provided room for the reduction of RMB interest rate and realized the policy intention of China's central bank to reduce RMB interest rate to stimulate economic growth. 1999, the United States announced a rate hike, which directly restricted the downward adjustment of RMB interest rate in China.