Author(s)

Hanyu Cao

Corresponding Author

Hanyu Cao

Abstract

The purpose of this paper is to deeply discuss the practical effects, challenges and corresponding countermeasures of monetary policy tools in maintaining the liquidity of financial markets. Firstly, this paper expounds the importance of financial market liquidity to economic stability, and points out that monetary policy, as an important means of macro-control, plays an irreplaceable role in maintaining financial market liquidity. At the same time, in order to comprehensively evaluate the effectiveness of monetary policy tools in maintaining financial market liquidity, this paper summarizes the development history and main types of monetary policy tools, and analyzes their application effects in different economic environments. At the same time, this paper also deeply analyzes the actual effect of monetary policy tools in dealing with the tight liquidity in financial markets. The results show that monetary policy tools have significant effects in maintaining the liquidity of financial markets, but the effects of different tools are different and influenced by many factors. At the same time, this paper also reveals the limitations of monetary policy tools in the face of financial market uncertainty, policy transmission mechanism obstruction and market expectation instability.

Keywords

Monetary policy tools; Financial market liquidity; Effect evaluation; Challenges and countermeasures