The Puzzle of the "Vicious Circle" Mechanism of the Risk-taking Channel of Monetary Policy Under Micro-perspective

Abstract

In view of the fact that monetary policy is related to financial stability, re-examinations and further studies on the risk-taking transmission channel of monetary policy has important practical significance. The marginal contributions of this paper are as follows: first, clarifying the risk effects of loose monetary policy in different micro sectors respectively, and clearing the differences of the micro sectors, which lie in the bottom of transmission channels. Second, based on the exposition of the "vicious circle" mechanism, putting forward purposeful reflection measures that decision-making department should take “appropriate loose†and “structural easing†measures. Third, based on the internal relationship between monetary policy and financial stability, discussing the boundary problem about the effects of monetary policy and macro-prudential supervision policy. On the basis of these, this paper proposes some problems that formulating monetary policy should take care.