Interest Rate Risk Management Of China's Commercial Banks

In a long period , China practices a strict interest rate regulatory po I i cy . But with the deve I opment of economy , i t i s d i ff i cu 11 for i nterest rate to perform the economic leverage , such as optimize resource allocation , regulate supply and demand of fund in market . This thesis analyzes the necessity of the marketization reform of interest rate , then puts forward the concrete steps which include China's marketization of interest rate should begin with the openness of China inter-bank offered rate , and end with the openness of deposit and credit rate . However , the var i ab i I i ty and the unca I cu I ab i I i ty of i nterest rate wou I d made every economic body , especially the commercial banks to suffer the risk of interest rate .With the deregulation of interest rate in the world , the management of interest rate risk has become one of the most important management of risk . In the process of interest rate risk management , the first importance is to measure the interest rate risk . On the basis of the measurement , the proper methods for managing interest rate risk could be chosen .China has been carried on strict control of i nterest rate , as result , financial institutions are insensitive to changes of interest rate , thereby lack of methods and instruments to managing interest rate risk . This thesis analyzes the present interest rate risk of commercial banks in China , and points out the commercial banks are in a passive position when they meet with risk. Meanwhi le this thesis analyzes concretely the interest rate risk of commercial banks , when they on the present interest rate system , and on the condition of marketization of interest rate . By studying the methods used in management of interest rate risk in the world , this thesis puts forward some suggestions to establish China's managerial system of interest rate risk.