Research On The Reform Of Interest Rate Marketization In China

As the central bank’s main policy tool, interest rate plays an extremely important role in the financial macro-control. At the same time, it’s the price performance of fund, which can determine the efficiency of resource allocation and has a great significance to the performance of social credit and leverage rates. In the case of the inefficient resulting from regulated interest rates, countries all over the world poured into carrying out market-oriented interest rate reform, setting off a wave of market-oriented reform of interest rates. China has begun the market-oriented reform of interest rates to gradually lift the interest rate control and construct the market interest rate system since 1996. People’s Bank of China decided not to set the floating deposit rate ceiling of commercial banks and rural cooperative financial institutions from October 2015.Since then, the practice of market-oriented interest rate reform has entered the final stage. But it’s just a new beginning instead of the end of the interest rate market-oriented reform. Researches on how to continue to promote market-oriented interest rate reform and prevent from risk after the reform have important theoretical and practical significance, and will still be the focus of the academic discussion.This article bases on the study of the background and the basic theory of market-oriented reform of interest rates. First of all, it makes an evaluation on the experience and lessons during the reform practice by analyzing the market-oriented interest rates reform of the United States, Japan, Argentina, Chile, making a summary analysis about the successful experiences from the United States and Japan and the lessons from the failure of Argentina and Chile. Secondly, it analyses the course of China’s market-oriented reform of interest rates and raises the issues the reform is now faced and goals it will achieve. Based on the analysis of China’s interest rate market-oriented reform process, this part makes a summary of the difficulties that the current market-oriented reform of interest rates is faced, mainly including the underdevelopment of capital markets, the lack of financial supervision, the defects in deposit insurance system, the insufficient of Economic marketization and the poor risk management capabilities of micro behaviors. Through the above analysis, we draw a goal which will be achieved through the market-oriented reform of interest rates, which is the marketization of interest rate formation mechanism and of monetary policy transmission mechanism. Last but not least, it puts forward some policy recommendations to accelerate market-oriented reform of interest rates and to prevent from risk from the perspectives of government, market and financial institutions. I hope the article will be helpful for in-depth study of the market-oriented reform of interest rates.