The Central Economic Work Conference held at the end of 2024 emphasized the need to implement a moderately loose monetary policy. This year's Government Work Report further deployed the implementation of a moderately loose monetary policy, proposing to increase support for technological innovation, green development, boosting consumption, and private and small and micro enterprises. The term 'moderately loose' has returned to people's vision after many years, which is very different from the 'prudent monetary policy' of previous years and the 'tight' monetary policy implemented in history. This has attracted widespread attention from all sectors of society and they are eager to know why. Specifically, on the one hand, this is a monetary policy adjustment made based on the current domestic economic situation. According to data from the National Bureau of Statistics, China's total economic output will exceed 130 trillion yuan for the first time in 2024, with a 5% increase in Gross Domestic Product (GDP), continuing to be the "ballast stone" for global economic growth. But it must also be acknowledged that China's economy still faces problems such as insufficient effective demand, and some enterprises are facing difficulties in operation and lack of vitality. Research has found that in coastal areas such as Guangdong, Fujian, Jiangsu, and Zhejiang, many enterprises are facing challenges such as reduced orders, increased labor costs, and difficulties in funding chains, hoping to receive more financial vitality. At the same time, it should be noted that in order to stabilize the real estate market and stimulate the vitality of the consumer market, the central bank and other departments have taken a series of measures, such as reducing the reserve requirement ratio and adjusting the interest rates of existing housing loans. The policy effects are gradually becoming apparent. It can be seen that a moderately loose monetary policy is a necessary macroeconomic regulation tool to promote sustained economic recovery and improvement. On the other hand, from a global economic perspective, the economic recovery is still weak. It is in this context that developed economies such as Europe and the United States have shifted their monetary policies towards quantitative easing, opening the "valve" for global loose monetary policies. The Federal Reserve already cut interest rates in December 2024, and economists predict that the Fed will cut rates multiple times this year. The research report of the International Monetary Fund (IMF) shows that the GDP growth rate of the eurozone in 2025 is 1%, which may be significantly lower than the global average, and the probability of further implementing loose monetary policy is increasing. In response to the trend of global loose monetary policy, China's monetary policy must also be adjusted accordingly. By adjusting monetary policy, clear policy signals can be transmitted to the market, and the market will spontaneously form stable expectations for the future direction of monetary policy, thus calmly responding to the "input inflation" caused by external loose monetary policy. In fact, since the establishment of the modern monetary system, multiple monetary policy adjustments have been implemented globally, and monetary policy has undergone profound changes. In response to the high inflation of the 1970s, some countries adopted a contractionary monetary policy. After the 2008 international financial crisis, countries widely adopted quantitative easing monetary policies. The experience of both positive and negative aspects at home and abroad has deepened our understanding of the function of monetary policy. China has proposed to implement a moderately loose monetary policy, and based on summarizing the experience of both positive and negative aspects, we will adhere to the principle of self centeredness and scientifically coordinate "stability" and "progress". So, how to implement a moderately loose monetary policy? Based on the relevant policies of the central government, there are several main focus areas. Firstly, comprehensively utilizing various monetary policy tools such as interest rate cuts, reserve requirement ratio cuts, refinancing, and rediscounting to stimulate market demand and vitality. By using policy tools to reduce the financing costs and burdens of enterprises and individuals, stimulate credit demand, stimulate investment and consumption potential of business entities, and increase market liquidity. Considering that the transmission mechanism of interest rate cuts to the economy still needs to be further unblocked, and that China's economy is in a critical period of transformation and upgrading, in order to maintain the overall stability of commercial bank credit asset quality, more moderate decisions on interest rate cuts are needed. At the same time, the more effective monetary policy tool of reserve requirement ratio reduction can be used to release more liquidity, increase the supply of credit funds in the banking system, and provide credit support for the release of investment and consumption demand. Encourage financial institutions to leverage the cost advantage of implementing policy tools such as interest rate cuts and reserve requirement ratio cuts, innovate products and services, provide more convenient and low-cost financing solutions for business entities, and further stimulate domestic demand potential. Second, we should comprehensively use policy tools such as treasury bond bond trading and outright reverse repo to enhance liquidity. Focusing on the implementation of more proactive fiscal policies, the Central Economic Work Conference proposed measures such as increasing the issuance of ultra long term special treasury bond and increasing the issuance and use of special bonds of local governments. This indicates that the scale of government debt financing will significantly expand by 2025. Therefore, a moderately loose monetary policy can comprehensively use treasury bond trading, buyout reverse repurchase and other tools to coordinate with the implementation of more active fiscal policies, adjust the liquidity of funds and the level of interest rates, and provide necessary financial support for the stable operation of the economy. At the same time, we should constantly improve the treasury bond market system, improve the liquidity and transparency of the treasury bond market, and provide a basis for maximizing the policy effect. Thirdly, promote economic structural adjustment through optimizing and innovating structural monetary policy tools. In recent years, the innovation of multiple structural monetary policy tools has played a positive role in guiding capital flow, optimizing credit structure, and supporting the development of the real economy. To implement a moderately loose monetary policy, it is necessary to fully utilize structural monetary policy tools such as agricultural and small loans, technological innovation loans, special loans for equipment renewal and renovation, and inclusive small and micro loan support. At the same time, attention should be paid to dynamic adjustment and optimization, further stimulating the flow of credit funds to key areas and key links, promoting stable economic operation and economic structural transformation and upgrading. (New Society)