MONETARY POLICES 3
New York Fed’s President, and four of the rest of 11 presidents of regional reserve banks, who
serve on a rotational basis.
In China, People's Bank of China (PBOC) is mandated to formulate the monetary policy,
and it is equivalent to the USA’s Fed. It controls and supervises the domestic financial sector and
the banking system. PBOC represents China in global financial organizations such as the
International Monetary fund (IMF) the World Bank, and The Asian Development Bank (ADB).
The functions of the PBOC’s Monetary Policy Committee include the formation of credit plans,
setting of interest rates, regulation of the financial market, issuance of Renmimbi, control of the
interbank bond market, and management of foreign exchanges. PBOC performs these
responsibilities with the aim of maintaining financial stability and stimulating economic growth.
The committee is composed of the Governor and Deputy Governors of PBOC, vice ministers of
the State Development and Reform Commission and Finance, the President of the China
Association of Banks, the National Bureau of Statistics Commissioner, and chairpersons of
China Banking Regulatory Commission, Securities Regulatory Commission, and Insurance
Regulatory commission (PBOC, n.d.). Other members include the State Administration of
Foreign Exchange’s Administrator and an academic expert.
Instruments Used by the Agencies
Fed uses the open market operations, the discount rates, and reserve requirements tools to
implement monetary policy. While the Fed’s Board of Governors is responsible for the discount
rate and reserve requirements, FOMC is mandated to oversee open market operations, which
directly affect the rates at which the depository institutions lend each other, also known as the
Federal Funds (FF) rates (Thornton, 2004). The FOMC also oversees the operations undertaken