China unveils new steps to free up interest rates, bank deposits
BEIJING (REUTERS) - China will allow banks to price loans based on market-based benchmark rates, as well as launch certificates of deposit soon to pave the way for liberalising interest rates, the central bank said on Thursday.
Chinese leaders are seeking to steer the world's second-latest economy towards a growth model that relies more on domestic consumption and want to gradually allow market forces to play a greater role.
"We will steadily push forward market-oriented interest rate reforms," Ms Hu Xiaolian, a vice-governor of the People's Bank of China (PBOC), said in a speech published on the central bank's website, www.pbc.gov.cn Ms Hu said these are near-term tasks but did not give a timeframe.
The central bank will expand market-oriented benchmark rates from the money market to credit markets and organise big banks to offer lending rates to their high-quality clients to set the benchmark borrowing costs for the industry. In July, the PBOC scrapped the floor on lending rates, but banks still price their loans based on the benchmark rates when they make loans. The one-year official rate stands at 6 per cent.