Help | Sitemap | Archive | Advanced Search | Mirror in USA |
Thursday, October 26, 2000, updated at 15:03(GMT+8) | |||||||||||||
Business | |||||||||||||
Interest Rate Reform Makes Initial ProgressThe saving and lending tendency of foreign currencies in Chinese banks has remained "stable" since China implemented major reforms on the interest rates of major hard currencies on September 21.The one-year deposit interest rate for the U.S. dollar (below 3 million U.S. dollars) was lifted from 5 percent to 5.5 percent on September 21, only 1.3 percentage points less than the international LIBOR (London Interbank Offer Rate) standard. It seems easy to catch up with LIBOR, but in reality, the gap indicates a long and arduous journey that the financial sector must go through, said observers Wednesday. In July this year, the governor of the People's Bank of China, China's central bank, announced that China is set to establish a market-orientated interest rate system in three year. Experts said that when the commodity market is 90 percent regulated by market supply and demand and the financial sector's market orientation is still below 20 percent, reform is inevitable. Market response to the reform has been quite slow. Deposits increased slightly from a month earlier, while loans remained almost unchanged. Zong Liang, deputy director of the Institute of International Finance under the Bank of China, explained that currently, more than 80 percent of bank deposits was less than 3 million U.S. dollars, and the majority of the remaining 20 percent was time deposits. Due to a sharp difference in the interest rates of loans in RMB and foreign currencies, enterprise's immediate demand for foreign currency loans remained slack, he added. "Moreover, this also explains why China first opened up this sector, which is less influential, but easier to practice," Zong pointed out. China began to make preparations for the interest rate reform in 1996. Since then, the central bank eased control on the interbank offer rates, discount loans and treasury repurchasing loans. In 1998, the central bank allowed commercial banks to have a floating interest rate of 10 percent, and 30 percent for loans to small and medium-sized enterprises. "However, only under a market-orientated interest rate system, can these preparations take effect," said Huang Xiaolong, an official with the PBOC. He added that due to the low level of market orientation of China's capital market, the leverage role of the interest rate can not be realized in such a short time. But this has provided domestic financial institutions with a "buffer" period to brace for fiercer competition. Huang noted that domestic commercial banks have already taken measures to increase financial goods, improve services and reshuffle RMB and foreign currency business. To further the reform, related departments and officials should study international currency policies, experts suggested. Detailed rules on the implementation of the reform should also be outlined as soon as possible, they said.
In This Section
|
|
Copyright by People's Daily Online, all rights reserved | | Mirror in U.S. | Mirror in Japan | Mirror in Edu-Net | Mirror in Tech-Net | |