To Promote The Reform Of Market-directed Interest Rate

More than twenty years after the Open and Reform policy been prosecuted, the economical institution reform in China has reached a new stage. Although the market-directed economy system has been primarily set up in China, the lag of financial reform confined further step of economical institution reform. Finance is a core part of modern economy. The fundamental attribute of modern finance is that the price of financial goods should correspond to the supply and demand in the market.According to the price system in China, price of almost all kinds of products is the result of supply and demand in their market except that of financial product. The price of financial goods is still under government control, which will be the most serious problem in the process of further financial and economical reform.WTO is a kind of institution whose goal is to settle the market-directed economy into the countries all over the world. After we entered WTO, the financial reform become more and more urgent. Entering WTO means abandoning old economical institution and executing thorough financial reform. In this new era, study of promoting the reform of market-directed interest rate under open economy has profound meaning.There are a lot of articles about market-directed interest rate reform nowadays, but most of which did not settle the reform into the open economy condition. Interest rate is the foundation of inner economy balance, while the exchange rate is the key to outer balance. So, in my study, I put interest rate and exchange rate together, then come to the conclusion that interest rate and exchange rate should be coordinating. There are six chapters in my thesis. Chapter one: the interest rate system. Chapter two: the necessity for China to promote interest rate reform. Chapter three: theoriesabout interest rate and the reform practices in China. Chapter four: analyze the situation for the reform nowadays in China. Chapter five: new situation call for new conditions. Chapter six: illustrate how to keep interest rate and exchange rate coordinating.I tried to do some innovations in this thesis: from connected instead of isolated point of view to do this research. I not only put interest rate and exchange rate together to explore instead of studying them separately, but also quote the current popular balance development theory to do my research.