Research On Basic Interest Rate During The Course Of Interest Rate Liberalization Reform In Interim Of China

Beginning from 1996 Chinese interest rate liberation has developed for ten years or more and obtained substantial achievements. The structure of financial market has been approached to the level of the American & European developed countries; transactions of monetary market and capital are active obviously with increasing trading kinds, and market capacity has been increased by several times, chief monetary sub-market adopted basically the market principle, such as national debt buy-back market etc. But we must realize that due to the lack of basic interest rate mainly, comparing with the level of developed countries,the level of interest rate liberation is not high in China and the effect of policy for interest rate is not apparent . Consequently, it's unusually important and urgent to choose one kind of basic interest rate that suits for the conditions of economy development in interim.This article started from Chinese reform of interest rate liberation, and systematically elaborated basic theories of interest rate liberation and connotation characteristics and functions of basic interest rate, then pointed out the theoretical foundations to choose basic interest rate through analyzing experiences of countries that have developed interest rate market such as the United States and Japan, at the same time, this article analyzed solely now-days main interest rates of Chinese monetary market based on the international experiences and principles of choosing basic interest rate and Chinese present development of interest rate liberation and by means of western dominant economic and financial theories and approaches of theoretical and empirical analysis, qualitative analysis and quantitative analysis. Moreover, this article analyzed inter-bank purchase-back interest rate thoroughly according to basic interest rate's principles and found that it is more close connected with internal interest rate and external interest rate by applying the methods of correlation test and Johansen co-integration test and also contracted comprehensively rate of rediscount,inter-bank offered interest rate,inter-bank purchase-back interest rate and inter-bank bond market cash transaction interest rate respectively from six respects by means of qualitative analysis and correlation analysis .At last, the article drew an conclusion that seven–day's inter-bank purchase-back interest rate is regarded basic interest rate,and put forward solutions to promote basic interest rate's function:to open up a path for interest rate conduction mechanism of monetary policies and to perfect the transaction systems of inter-bank bond market.