What are the means of monetary policy?

Monetary policy tools are various economic and administrative means controlled by the central bank to adjust the base money, bank reserves, money supply, interest rates, exchange rates and credit activities of financial institutions to achieve their policy objectives. There are seven main measures:

First, control currency issuance.

Second, control and standardize commercial bank loans.

Third, we should promote open market business.

Fourth, change the deposit reserve ratio.

Fifth, adjust the rediscount rate.

Sixth, selective credit control.

Seventh, direct credit control.

The monetary policy tools available to the central bank are not unique, but a tool system composed of various tools, each of which has its own advantages and limitations. The central bank realizes its macro-control objectives through the choice and combination of monetary policy tools.

Extended data:

Overview of monetary policy tools:

In order to achieve its ultimate goal, there is a conduction mechanism and a time process. General central banks use monetary policy tools-operational objectives-intermediate objectives-ultimate objectives. In other words, the central bank affects the activities of financial institutions such as commercial banks through the operation of monetary policy tools, which in turn affects the money supply and ultimately affects the macroeconomic indicators of the national economy.

The operational indicators of China's monetary policy mainly monitor the base currency, the bank's excess reserve ratio, the interbank lending market interest rate and the interbank bond market repurchase rate; Intermediary indicators mainly monitor the money supply and the total credit represented by the total loans of commercial banks and the transaction volume in the money market.

Baidu Encyclopedia-Monetary Policy Tool

Baidu Encyclopedia-Monetary Policy