Positive Analysis of the Effect of Currency Policy on Medium Target

As the market goes maturing gradually and the internal productive capacity of currency is strengthening, the currency policy, which takes the supplying amounts of currency as its medium target, tends to be weakened. In addition, the factors as the disadvantages of the running system and operating rules in the state owned enterprises and state owned banks, the underdevelopment of the financial market, the imperfect social security system and people's consuming ethic concepts in China, are conditioning the role played by the currency policy. Therefore, the limitation to the currency policy comes from not only the field of currency, but also the corresponding steps in substantive economy. In the period of currency shortening, as a matter of fact, the capital was not insufficient, but mainly stayed in the course of production and banks. Under this circumstance, the directive and effective way can only come from financial policy, while the currency policy can solve the problem of circulation means which economy needs.