Study On The System Of Interest Rates Under The Market-oriented Reform

Interest rate is the price of currency, it should be decided by the parties in the transaction. The right of determining the interest rates is the core issue of interest rate marketization. The right of deciding interest rates should lies in the hands of financial institutions such as commercial banks. However, in our country, interest rates of deposit and lending is determined by The People’s Bank of China. The strict and artificial restrict of interest rates can not meet the needs of financial reform.To achieve the marketization of interest rates is letting market plays a basic role in allocation of resources in capital markets, and creates a market-oriented interest rate. Rational determination of deposit and lending rates of commercial banks is inseparable from the effective regulation of China Banking Regulatory Commission. Supervision of Interest rate guarantee the reform results.The country should intervene in the mechanism of interest rate indirectly, and regulate the competition of interest rate prudently. Otherwise the Laissez-faire policy may cause banking crisis. Interest rate is the core of financial markets, and it is an important lever in Macro-control. Study on the development of interest rates in the developed countries, we can find out that they also get involved in the decision of interest rate, just in a mature and indirect way. But in China, the control of interest rate is still too much and too restrictive, which is detrimental to the healthy development of the financial market.The right of deciding interest rates, supervision and regulation of interest rates play important roles in interest rate marketization.