Monetary Policy Reform Fraught with Risks
As financial liberalisation intensifies, China needs to reform its monetary policy framework commensurate with structural changes in the economy to ensure effective policy management in preparation for capital account convertibility. Without sufficient monetary policy tools, China will not be able to manage the economic volatility stemming from its transition to a market-driven model under the Impossible Trinity paradigm.
KeywordsInterest Rate Monetary Policy European Central Bank Lending Rate Financial Liberalisation
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