Since the mid-1990s, State bank has further strengthened the market-orientation of policy implementation, cut reserve requirements, developed open market operations, increased the flexibility of liquidity management, sharpened the focus on interest rates while maintaining reserve money as the operating target, improved the transparency of policy signals and shortened the maturity of interest rates serving as the fulcrum of policy.
Even with an apparent decline in the pass-through of exchange  2  BIS Review 28/2008  rates into import prices, the increase in trade volumes arising from globalization has presumably boosted the relative importance of the exchange rate in the economy, thereby strengthening an unpredictable factor in the monetary policy transmission mechanism.