Monetary policy was “moderate liberal” return “sound”, the key is to properly handle the sustained and stable economic development and the adjustment of economic structure and management of inflation expectations dialectical relationship between, that is to achieve relevance and flexibility of monetary policy.

Next year China will implement the proactive fiscal policy and prudent monetary policy. The question is how to effectively implement “sound” monetary policy objectives? Monetary policy is to emphasize the “prudent and flexible”, that is, monetary policy is to have highly relevant, but also a certain degree of flexibility. This is the implementation of prudent monetary policy next year, the substance and soul.

First, the implementation of prudent monetary policy next year, stressed the relevance, mainly in properly handle the sustained and stable economic development and the adjustment of economic structure and management of inflation expectations dialectical relationship between the central bank monetary policy accordingly necessary to further clarify the direction and the choice of monetary policy instruments.

First, monetary policy should be clearly targeted. On the one hand, the current economy is in a “capital growth, anti-inflation” of the contradiction, and the anti-inflation has been transformed into the main aspects of conflict; the other hand, from the point of view of monetary policy objectives, between economic growth and stability of the currency conflicts have become increasingly prominent, rising prices have also become in the economy one of the basic contradictions. Therefore, the focus of the current monetary policy objective should be targeted to prevent inflation.

Secondly, the use of monetary policy tools must also be targeted and purpose. In the current banking management system, the commercial banks to expand credit and money multiplier result in faster growth of money supply M2, indicating that the credit scale is still the central bank control money supply, the most powerful means. Once relaxed, including macroeconomic policy, including monetary policy, commercial banks will wake up the “natural” impulse of credit, the liquidity of the banking system will be quickly converted into market liquidity. In response, the use of monetary policy tools should be a clear goal-directed, more focused. On the one hand, monetary policy should be targeted to use. The focus of monetary policy objectives for the change, the central bank use of open market operations, interest rates, deposit reserve ratio, the three monetary policy tools to achieve “effective with the” have put a close, there is a tight song. To ensure that the overall demand in the case of money supply, targeted use of policy instruments to promote economic restructuring and sustainable economic stability and healthy development. At the same time, the central bank monetary policy needs innovative tools, such as to market or recycle liquidity policy instruments to maintain the vitality and monetary policy effectiveness.

Second, the implementation of prudent monetary policy next year, stressed that the flexibility, mainly in how to manage liquidity, so that the flow of credit funds for more real economy and monetary policy to strengthen the role of its structural features and how to achieve its financial and other tension between the policy mix.

Historical experience shows that China’s money supply presented by the “high low” rule, to some extent reflect the economic performance between the real money supply and demand. However, this law not only reduced the space for the operation of monetary policy may also result in money and credit of the “Forced mechanism.” In the first 10 months of money and credit supply has exceeded the annual goal of 90% to reflect this “Forced.” Therefore, to avoid this situation, we must maintain the flexibility of the credit money supply, money and credit supply as stable pace throughout the year, and gradually change the current excessive monetary and credit supply showed seasonal and “high low” rule. In addition, monetary policy should have some anti-anticipated features to ensure that monetary and credit policy and control room for policy flexibility, in order to change the market’s “expectations.”

Also, to date the total of the monetary policy emphasizes the function and role of policy adjustment, how to strengthen the monetary policy function and the structural role that the emphasis on “discrimination, there is pressure to maintain” monetary, credit and interest rate and other structural policies, This will change the past, monetary and credit policy of total control over facing structural adjustment unfavorable predicament.

In addition, the flexibility of monetary policy but also in how to strengthen coordination with other policies, the macroeconomic policies in order to improve synergies. For example, the current monetary policy, return to the “sound” fiscal policy but the tone is still “active.” Therefore, monetary policy next year to strengthen the “anti-inflation” the importance of the need to play an active fiscal policy in the “growth” policy coordination role.

From the perspective of monetary policy coordination of macroeconomic policies, one at strengthening the control of money and credit should also increase the role of policy guidance, trying to maintain the steady growth of money and credit, a reasonable and balanced progress in the delivery of credit funds in order to avoid credit ups and downs, and stable operation of the economy; the second is to focus on monetary policy and fiscal policy adjustment and structural adjustment in the total amount of coordination and binding. Among them, the central bank should strengthen the analysis and prediction of mobility, flexibility in adjusting the supply and demand of funds, the liquidity of the banking system to ensure sufficient funds to meet the needs of the real economy. At the same time, monetary policy and fiscal policy should also “avoid weaknesses”, give full play to the policy of cross effects, the formation of a joint force of macroeconomic policies to achieve the best results of macro-control.

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