Each of these factors may, at times, require targeted policy intervention to overcome obstacles to bank lending. But the types of policy intervention and the domains of policy responsibility fundamentally differ across these three factors. In this context, let me outline what I believe are the three major lessons of the crisis.
Monetary policy effectiveness has faced challenges in recent years  The independence and effectiveness of China’s monetary policy has met with serious challenges from rapid expansion of RMB supply as a result of foreign exchange purchase. Prior to 1993, China ran current account surplus and capital and financial account surplus on an alternate basis.