Consideration For China's Reforming Of The Marketization Of Interest Rate

Almost countries in the world have finished the reforming of the marketization of interest rate. It is necessary choice that China takes action to the reforming of marketization of interest rate. The theory of interest rate is the important part of modern monetary and financial theories. Both developing countries and developed countries have all practiced the policies of financial regulation and interest rate regulation. The developing countries implement the lower interest rate policy for the purpose of controlling the economic resources to guarantee the major project and encouraging investment, while the developed countries mainly for the safety of its financial sector. The policy of interest rate regulation actually has played a significant role. But on the other hand, its inefficiency is also very obvious. While making further advances on the economy, the countries must deregulate their interest rate policy and marketization the interest rate.The marketization of the interest rate is the main content of the financial liberalization reform. From 1960s,influenced by the theory of financial liberalization and encouraged by some international organizations, many countries carried out the reform of financial liberalization one after another for the purpose of deregulation. The interest rate deregulation will improve the efficiency of the allocation of financial resources thus has an positive effect on the economic development. The whole financial reform includes marketizing the interest rate, cancelling the loan rationing, deregulating the capital flow and the market entry, and reducing the reserve ratio, and its main content or central part is the marketization of the interest rate around which reforms in other aspects are carried out. Therefore, the marketization of the interest rate is the key to the financial liberalization reform. Both scholars in academic circles and economic policy makers in the real world have reached agreements that the ultimate trend of interest rate reform be interest rate liberalization, which means the interest rate should be decided by free market competition, specifically the demand and supply forces in the financial market.From the present situation, we think that the market-oriented reform of the interest rate is virtually the last difficulty problem of China financial system reform and even of the whole economic system reform.