In this final chapter, we review the book’s argument as to why Chinese monetary policy leaned so heavily on direct banking controls in the 2000s, and comment on the legacy this period has left in Chinese monetary policy. The emergence of a Chinese form of ‘shadow banking’ reacted to banking controls, and seemed to undermine policy dependence on such direct measures. In the 2010s, policymakers reconfirmed their intent to deregulate bank interest rates, lower reserve requirements, and build their capacity to manipulate interbank market conditions. It seemed again that Chinese policy was ‘liberalising’. But authorities also showed a willingness to extend and intensify regulation over the ‘shadow banking’ sector, bank loans resurged as the overwhelmingly dominant source of finance, and most of the control-based instruments of the 2000s remain.
KeywordsMonetary policy China Liquidity Central banking Reform
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