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China Loosens Control on Foreign Currency Interest Rate
The People's Bank of China, the central bank, announced Tuesday that major reforms on the administrative system of interest rates of foreign currencies will be implemented from September 21.
A bank spokesman said that this move aims to promote a market-oriented interest rate reform so that China's banking industry will open wider to the outside world.
A circular issued today by the bank says the lending rate of foreign currencies will be liberalized. Financial institutions are authorized to define by themselves the lending rate and interest settlement patterns of foreign currencies according to the fluctuations of interest rates in the international financial market, as well as financing costs and risks.
The interest rate of foreign currency deposits equivalent to three million US dollars or over will be decided through negotiations between financial institutions and their clients.
According to the circular, the interest rate of petty foreign currency deposits will be designated by the China Association of Banks as a unified rate to be carried out by all financial institutions.
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