Abstract: Through constructing theoretical models of market competition, monetary policy and bank risk-taking, this paper empirically tests the unbalanced panel data of 124 Chinese banks from 2007 to 2020. The results show that with the increasing market competition, the effect of monetary policy regulation on bank risk-taking is gradually strengthened, and the change of monetary policy has a magnifying effect on bank risk-taking level. Quantitative monetary policy instrument changes have a significant "booster" effect on bank risk-taking level, while price monetary policy instrument changes have a mild "elastic" effect on bank risk-taking level. The robustness test shows that the aggregate monetary policy changes have heterogeneous characteristics on the risk taking level of banks with different interest rate maturities and different asset sizes. Structural monetary policy instruments have a significant guiding influence on the level of bank risk-taking. In the monetary policy, therefore, the reasonable abundant liquidity should be guaranteed for the total money supply, while the fast increase in bank risk bearing level be under control in serious competition; the term structure of monetary policy tools is used to guide the capital flow for improving the market structure; the innovative monetary policy tools are used for precision financing to new, small-sized, innovation-type and green businesses in the real economy for maintaining a stable macroeconomic development.