China will relax deposit rates .when the time is ripe. as the central bank intends to let the market play a decisive role, Hu Xiaolian, deputy central bank governor, said yesterday.
.It has been proven both theoretically and practically that the most efficient way in allocating market resources is to let the market decide,. Hu told a financial forum in Beijing.
She said the liberalization of interest rates will embrace financial institutions playing a bigger role in deciding the rates, establishing a central bank policy rate system that reduces intervention in the market and liberalizing deposit rates.
.After that, financial institutions will be able to set prices through competition and decide on an equilibrium of interest rates in the market,. Hu said.
China in October published loan rates based on quotes from banks as it moves further toward establishing a market-based interest rate system.
The rate, known as prime loan rate, can be used as a reference for banks to set lending rates and will replace the current benchmark set by the People.s Bank of China.
Gu Mingde, a researcher with the Shanghai headquarters of the PBOC, told a forum in Shanghai that interest rate liberalization will accelerate but it will not result in a collapse of banks as a healthier economy will sustain banks. profitability.
He said detailed measures will be unveiled as the authorities establish a deposit insurance system and a prime loan rate mechanism.
Their comments echoed central bank Governor Zhou Xiaochuan.s pledge to relax curbs on the foreign exchange market and allowing market forces to play a leading role.
He said the PBOC will .basically. refrain from setting a daily guidance on the yuan exchange rate and scrap a quota system that is limiting foreign investment in the domestic capital market.Easing of deposit rates at right time文章来源头牌英语[财经资讯]