China Economic And Financial Environment Research Of Interest Rate Futures

With the deeper interest rate liberalization, its fluctuation risk has become themajor risk faced by investors in China. While, the most affiant tool to avoid thiskind of risk is interest rate future, which can not only avoid its fluctuations andtransfer risks, but also increase the pricing efficiency in the spot bonds market,therefore realizing its function of price discovery.The purpose of this paper is mainly to investigate whether Chinese currentfinancial and economic conditions are capable of carrying out interest rate future. Takingtreasury bond futures as an example, which were initially issued in1992on ShanghaiStock Exchange, I analysis the causes of failure from the following aspect including thedevelopment of financial market, the supervision system, the condition of the conditionsof legal system and treasury bond futures contract itself. And then analysis thenecessity and availability of restarting the interest rate futures. Meanwhile, I alsocompared with other countries in their developing situation, an illustrated the greatimpact brought about by interest rate futures on financial market and economicenvironment. Finally this paper advanced some propositions about the establishment of theinterest rate futures market, which therefore will promote the development of China’s bondmarket, deepen the reform of financial and economic market, improve the system ofmarket economy, in the context of globalization, enable China’s financial market to betteralign with the international community and achieve a long term development.