The Study On The Risk Controlling Of The Market Determination Of Interest Rate

As one of the important steps for the marketization of the Chinese financial industry, the market determination of the interest rates is one of the symbols for the national economic circulation system' s transformation into the market economy. And it is also one of the subjects we should settle after the entry of the WTO.The market determination of interest rates refers to the system that the government or the central bank releases or give up the direct supervision of the interest rates, and delivers the right of decision-making and prize-making to the main bodies of the market, with the interest rates determined by the market supply and demand and the risk. It is guided by the norm interest rates of the central bank, with the interest rates of the short-term national debts as the financial interest basis, and various kinds of interest rates kept in proper interest margin and delamination. The central bank can influence the financing supply and demand indirectly by changing the deposit reserve rates, rediscount rate, reloan rate and ventilating the marketing manipulation, so as to affect the interest rates, guide the currency flowing, enhancing the efficiency of the financing manipulation and collocation.Influenced by Ronald and Edward's theories of "Financing restraining theory" and "Financing Deepening Theory" , many developing countries unloosened the control of their interest rates, canceled the credit ration system, and performed the reform on the market determination of the interest rates to develop its backward economy. And until 80s, many developed countries such as America and Japan got involved in the campaign, among which many had profited from it, with the financial system improved and financial efficiency enhanced, while some others were frustrated by financial conjuncture and decline.The market determination is always accompanied by risks. We should not only advance towards the aim but also try to elude the risks.With the gradual financial marketing opening to the world after the entry into the WTO, China has already entered the critical stage of the financial reform. Faced the financial situations both home and abroad, we should make a further reform on the marker determination of interest rates on the achieved basis. Only in this way can we enhance the financial ration efficiency, deepen the financial reform, strengthen ourselves to participate into the international competition. On the purpose, the writer analyzed the necessity of the market determination of interest rates, and the potential risks over the further reform and put forward the risk-controlling plan based on the lessons derived from the many countries' successful and failed reform experiences.