Abstract: In order to cope with the impact of "financial tsunami" on China忆s monetary market, the central bank created a new short-term monetary policy tool in 2013, the standing lending facility tool, which is used as the upper limit of the interest rate corridor to stabilize the market interest rate. In this context, the paper uses SVAR model to test whether the standing loan facility has a stable effect on the short-term market interest rate. The results show that the short-term market interest rate in China has been significantly reduced since the implementation of the frequently used loan facility. As one of the short-term monetary policy tools, the implementation of the standing lending facility has important practical value for China to explore the establishment of interest rate corridor mechanism.

Key words: standing loan facility, short-term interest rate level, reduction, SVAR Model