In a transition economy, policy-makers tend to rely on quantity measures and avoid price instruments. In fact, the experience of price reform shows that price mechanism is often more effective than expected. Monetary policy transmission mechanism to a great extent determines the choice of instruments.
In the monetary policy conduct, there have always been disputes on the pros and cons of price and quantity instruments. Currently, price instruments such as interest rate and exchange rate coexist with quantity instruments such as liquidity absorption and foreign exchange control. For an extended period of time in China, quantity measures were preferred while price instruments were seldom used.