Has SHIBOR Been Our Country’s Benchmark Interest Rate

Our country is in the process of the interest rate marketization, which began in the middle90’of20th century. With the twenty years’development, we have made a big success in the market with a continuous creation in financial products and active trade. However, the most important thing is to determine a benchmark interest rate in the interest rate system which including a large amount of interest rate. And this benchmark interest rate is the basis for other interest rate to make their prices.As the kernel of the market interest system, its confirmation has a significant meaning to the development of the financial markets. When there is a change in the benchmark interest rate, other interest rates in the market will change. Therefore, the central bank can use the method of macroeconomic regulation and control, by changing the benchmark interest rate to influence other interest rates’ changes. As a result, participants in the market will change their behavior accordingly, and ultimately it will lead to an achievement of the purpose of the central bank to take monetary control policies. This chain effect makes the benchmark interest rate to be the intermediary role in monetary policy implementation process. In the global market, developed countries have established their benchmark interest rate, as the British sets up London Interbank Offered Rate (LIBOR) and Singapore determine the Singapore Interbank Offered Rate (SIBOR).China launched the Shanghai Interbank Offered Rate (SHIBOR) in2007. The purpose is to promote the marketization of interest rates, to cultivate the Chinese money market benchmark interest rate, to improve the independent pricing ability of financial institutions, and to give a better improvement the monetary transmission mechanism." If SHIBOR becomes the market benchmark interest rate, it will be a key step to achieve the marketization of interest rates. Therefore, there have been many researches on the SHIBOR’s running since SHIBOR launched. And it is an urgent need to be inspected that whether SHIBOR has taken on the responsibility of the Chinese market benchmark interest rate.This paper is taking the marketization of interest rates as background, combined with a number of research scholars. First of all, it makes a theoretical research on the definition and characteristics of the benchmark interest rate of SHIBOR. Then, in the empirical analysis section, the paper takes the main line of the SHIBOR’s running, firstly testing the term structure of SHIBOR, secondly making the Granger causality test to see its effectiveness, and using impulse response function method to test its stability. According to these qualitative and empirical analyses, I draw the conclusion of the SHIBOR’s constraints and weakness as a benchmark interest rate, and gave the countermeasures and suggestions.