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Influence of Developed Economies’ Monetary Policy Adjustments on International Financial Market and China and Relevant Suggestions(No.137, 2017)


By Chen Ning, Research Institute of Finance, DRC

Research Report No.137, 2017 (Total 5212) 2017-10-23

Abstract: Since the outbreak of the international financial crisis in 2008, the central banks of various major economies have respectively adopted an easy monetary policy by a large margin in response to the global financial turmoil. Recently, the world economy is presenting a positive momentum and the monetary policy of developed economies starts to make relevant adjustments at different time and in different periods. Driven by this factor, the asset price of the international financial market is thrust to a high level of risks with increased uncertainties. For some time to come, the tightening monetary policies implemented by the developed economies’ central banks may further mount up the potential risks of global financial market. China will face a series of problems including capital outflow, exchange rate fluctuations, the spillover effect of international monetary policies and the turbulence of international financial market. However, since developed economies are slow in implementing the tightening monetary policy, the impact is limited across the board. China’s monetary policy should be based on the domestic economic performance and be combined with the supply-side structural reform. Meanwhile efforts need to be made to strengthen policy coordination and reinforce supervision so as to ward off the potential risks in China’s financial market.

Key words: developed economies, monetary policies, financial market, influence