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President Yi Gang's signature article reveals impo
Published:12/2/2019 3:59:32 PMViews: 16
"At present, the internal and external situation we are facing is complex and changeable, with both opportunities and challenges. Internationally, after the financial crisis, major developed economies implemented unprecedented loose monetary policy, which was difficult to exit near the "zero interest rate" state, and unconventional monetary policy was forced to "normalize" Yi Gang, governor of the people's Bank of China, wrote in the Journal of seeking truth that China's economic growth rate is still in a reasonable range, and inflation as a whole remains at a moderate level. In addition, we have the institutional advantages of a socialist market economy, so we should maintain a normal monetary policy for as long as possible. Even if the monetary policy of the world's major economies approaches to zero interest rate, we should adhere to the principle of seeking progress in stability, making precise efforts, not engaging in competitive zero interest rate or quantitative easing policies, and always adhere to the original mission of monetary policy to maintain the stability of currency value and protect the well-being of the overwhelming majority of the people.
No competitive zero interest rate or quantitative easing
Since the outbreak of the international financial crisis in 2008, major developed economies have implemented unprecedented monetary stimulus, ranging from conventional monetary policies such as interest rate reduction to unconventional monetary policies such as zero interest rate, quantitative easing, forward-looking guidance and even negative interest rate. Yi Gang pointed out that these policies effectively hedge the impact of the crisis and prevent the downward spiral of the economy and prices. However, in the medium and long term, they may also delay the internal adjustment process of the economy and aggravate structural problems.
In recent years, interest rates in major developed economies have declined significantly faster than economic growth and inflation, and the effect of interest rate reduction and quantitative easing policy has shown a trend of marginal decline. Due to high debt, insufficient growth momentum and persistent deflationary pressure in major developed economies, unconventional monetary policy is tending to be "normalized". Li Jianjun, chief researcher of the China business think tank, told reporters that the unconventional policy that was supposed to deal with the crisis has become more and more "conventional monetary policy". Although there may be some economic stimulus in the short term, the negative effect may be greater in the long term.
"At present, the world has entered an era of low interest rates, low growth and low inflation. Quantitative easing and negative interest rates have become the new normal of the international monetary environment." Zhang Xuechun, deputy director of the Research Bureau of the people's Bank of China, said recently that, in fact, the negative effects of quantitative easing and negative interest rate policies have already appeared, and even exacerbated the existing gap between the rich and the poor.
Zhang Xuechun further said that at present, China is one of the few countries without quantitative easing, zero interest rate and negative interest rate. We should treasure the space of monetary policy, unblock the transmission mechanism of monetary policy, coordinate the relationship between fiscal policy and monetary policy, and vigorously promote supply side structural reform.
"China does not need quantitative easing to stimulate economic growth." In the view of Wen bin, chief researcher of China Minsheng Bank, China's monetary policy instruments are sufficient. Through the combination of monetary policy instruments with different maturities and scales, we can fully maintain the reasonable and abundant market liquidity.