Shanghai to pioneer liberalization of interest rates

Home>>Business

Last updated at: (Beijing Time) Wednesday, March 10, 2004

Shanghai to pioneer liberalization of interest rates

Shanghai received verbal agreement from the central government to pioneer the liberalization of interest rates in the country.

DISCUSSION

CHINESE

SEND TO FRIEND

Shanghai received verbal agreement from the central government to pioneer the liberalization of interest rates in the country.

The latest official voice was delivered by Wu Xiaoling, deputy governor of the People's Bank of China, who said this week the central bank had already reached consensus on principles of interest rate reform and Shanghai would get full support to initiate the process.

"We are considering canceling the upper limit of lending interest rates while maintaining controls on bottom lending interest rates for commercial banks in Shanghai," said Hu Pingxi, head of the PBOC Shanghai Branch.

The idea differs from the current national stipulation on domestic financial institutions which have been permitted to extend loans with interest rates 1.7 times higher than or 10 percent lower than the central bank's guiding rates since the beginning of this year.

"We encourage any financial innovations with controllable risks to be tested in Shanghai, which is vying to become an international financial center," Wang Huaqing, director of the China Banking Regulatory Commission Shanghai Supervision Bureau, said in an earlier interview.

Though details of the trial interest rate liberalization program in Shanghai were still not available, municipality officials said last month that tasks to speed up interest rate flexibility in Shanghai would be conducted by 2010 when the city is expected to become a regional financial hub in Asia.

Shanghai, among the first batch of Chinese mainland cities that opened to foreign financial institutions, has already strengthened its position in the domestic banking industry.

The outstanding value of loans extended by local banks occupied 7.77 percent of the country's total last year and for the deposit sector, the proportion was 7.85 percent.

Meanwhile, industry officials said the pending permission for local banks to float interest rates more freely on a trial basis would give them more time to price products according to market conditions. The banking sector will open fully to overseas rivals at the end of 2006.

Source: Xinhua

Questions?Comments? Click here

China frees up lending rates

US Fed keeps key rate at 45-year low, hinting future increase

No interest rate rise in sight

It is unexpectedly easy to defeat "China Threat" theory: Japanese economist ( 168 Messages)

Rising sex disproportion sparks concerns ( 2 Messages)

Kerry launches first election website in Chinese ( 11 Messages)

China's economy must not get into the rut of Latin American countries: NPC deputy ( 7 Messages)

What's the meaning of Bush & Blair nominated as candidates for Nobel Peace Prize? ( 20 Messages)