The Research On Internal Funds Transfer Pricing Of Commercial Banks In The Market-orientation Background

In the background of the interest rate liberalization, which raises the level of theinterest rate risk of the commercial banks of China, a variety of problem such as therisk management, product pricing and the efficiency evaluation is emerging.Therefore, learning advanced management experience from foreign commercial bankand establishing a set of advanced and mature funds management system is muchsignificant for the development of the commercial bank of China. As the internationalmodern scientific funds management mode of commercial bank, Funds TransferPricing(FTP) relies on certain rules to transfer funds between the commercial internalfunds center and the business units. This method is significant to the centralization ofthe management of the interest rate risk, improvement of the financial product pricingand optomizing the effeciency evaluaion. At present, the study on Funds TransferPricing of China’s commercial banks is not perfect, which has not formed a modernscientific and rigorous pricing framework about the FTP in theory and an effectiveand exercisable FTP system in practice. Therefore, it is necessary to go for a furtherstudy.Firstly, this article introduced the theoretical basis of the connotation of thecommercial banks’ funds transfer pricing, operation mechanism, the basic mode andfunctions, and makes the feasibility analysis on the implementation of the internalfunds transfer pricing system in China, according to the status quo of the commercialbanks’ internal capital management, real-world conditions and the necessity. As aresult, on the one hand, the traditional “depositing-lending” variance capitalmanagement mode cannot meet the requirements of asset-liability management andperformance evaluation of modern commercial bank; on the other hand, the internalfunds transfer pricing reform in China is the main trend. Then, this article analysescomprehensively according to the step of designing the FTP curve(s), FTP pricingmethod and the FTP adjustment, based on the different market liberalization levelbetween the central bank benchmark interest rate and the market interest rate. As aresult, the commercial bank could think about the business and operationcharacteristics itself to choose the most appropriate method of the FTP curvemodeling and the FTP pricing, to improve the accuracy and reasonableness of its ownfunds transfer pricing, and enhance the efficiency of the use of funds of the bank. Finally, combined with the actual situation of China’s financial market, improvementrecommendations to carry out the Funds transfer pricing is proposed, which is muchsignificant to the actual operation of the commercial banks in China.