Study On The Choosing Of Benchmark Interest Rate Of Money Market In China

The inter-bank money market is the main place for the financial institutes such as commercial banks to adjust and finance the short-term liquidity requirements.It is also important for the central bank to make open operations and carry out the monetary policy and the financial manipulation.The inter-bank interest rates are representative of the market interest rate.It is not only the pricing standard of other financial assets,but also the important channel of monetary policy.The main line of the research is based on six basic principles of the variables compared to the money market in order to consider the choice of benchmark interest rates. The six basic principles are:the main market for good;good market instrument;good controllability;large volume of market transactions;reasonable term structure of interest rates;relatively with other economic indicators.This paper analyzes the relevance of the inter-bank money market interest rates,and through GARCH model,analyzes the maturity structure of inter-bank offered rate and the inter-bank repo rate.Finally,the paper pointed out that SHIBOR is a better choice as the benchmark interest rate of money market in China.