The Transmission Mechanism and Prospect of China’s Standing Lending Facility

Abstract

People’s Bank of China created the Standing Lending Facility (SLF) in June, 2013. As a tool of monetary policy, standing lending facility is created to maintain the stabilization of monetary market and help country’s economy develop steadily. In developed countries, tools like SLF have already been used much earlier than China, so this time I will use their research methods and try to study the transmission mechanism of China’s SLF. Meantime, in the background that China is carrying forward market-based reform of interest rates, the application prospect of SLF will be at the same time discussed.