Internal Mechanism And Institutional Conditions: US Interest Rate Control Review And Enlightenment

Interest rate ceilings on deposits, otherwise known as Regulation Q，is to protect thecommercial banks in the U.S.A, based on the belief banks· profits could be increasedby imposing ceiling rates on deposits. From1933to2011, Regulation Q prohibitedthe payment of interest on demand deposits, and imposed interest rate ceilings on timeand savings deposits paid by commercial banks, and the same as by thrift institutions(mutual savings banks and savings and loan associations).This paper focus on how federal policies on deposit interest rate ceilings hasworked over the78years since they first were imposed, and in contrast to the premiseof the Sino-US market conditions, objectives, institutional mechanisms, the theoriesand the enlightenments could be done with releasing interest rate controls in Chinaand get target in interest rate liberation.This paper is divided into six parts. The first chapter is about the history andtheories of interest rate controls. With the history, the first chapter is mainly to payattention to the legal interest rate controls, and religious interest ban controls, whichrevealed that market mechanisms are very important factors in determining the object,the purpose, the impact of interest rate controls. And then, in theory, the first andsecond chapters summarized the theory of interest rates and interest rate controls. Thetheory of interest was divided into two parts: the signal feature of interest and thelever feature of interest. Controls will cause the loss of signal control function, but theimpact of interest rate lever could depend on the conditions of the market mechanismhow to work.Chapters3and4are the main parts of this paper. The third chapter discusses theU.S. interest rate control mechanisms and effects, noted the decisive role of themarket mechanism on the effectiveness of interest rate controls. The fourth chapterdescribes the differences between the U.S. interest rate policy and interest ratecontrols. The former means to a kind of monetary policy, the latter means to a kind offinancial regulatory policy. The part also describes interest rate policies in the UnitedStates, and clarifies the mechanism and the structure in the U.S. interest rate system.The fifth chapter is about the history and summary of interest rate controls in China.Finally, the sixth chapter analysis the U.S. interest rate controls in-depth in order tofind the even path to interest rate liberalization in China.