Both
monetary policy and
financial policy are powerful macro control tools for government. It is crucial to keep two in havmony.
There are various forms of accordance between
monetary policy and
financial policy, including: policy tool consistency, policy validity accordance in phase, policy functions accordance and the accordance of the main body, hierarchy and methods of macro control. The governing pattern in Chinese government is transforming from immediate control to indirect ways by the development in three stages. Monetary policy and financial policy become main ways to control the economy. The expansionary effect of financial policy is being diminished as well as the mode of financial policy in China is transforming to public finance. In the current situation, loan interest should be further decreased and the support to the medial and small financial institutions should be improved in order to boost the investment in medial and small enterprise, keep the steadiness of price index.