The Challenges And Strategies For Commercial Banks On Interest Rates Liberalization

Since the rise of the financial liberalization of the eighties of the last century, due to the economic development needs of the market, most countries have carried out market-oriented reform of interest rates. Since reform and opening up, China’s economy has been developing rapidly, the interest rate marketization process has also been put on the agenda. With the economy and the deepening of the financial system, China’s market-oriented interest rate reform as China’s economic development will be more and more urgent, future interest rates will be gradually deepen reform period.With the continuous development of market economy, China’s economic ties with foreign countries more closely, the interest rate has become an important factor in our financial competition with other countries. Since the reform and opening up, China’s economy has made great progress, but a weak economic foundation, lack of experience and other shortcomings still exist, as compared to developed countries, China’s financial system is very fragile and thin, which doomed the interest rate reform will be a slow process, and it will be a process of labor pains. Throughout the characteristics of the world interest rate reform, progressive reform will be our choice, in the interest rate liberalization, opportunities and crises coexist. How commercial banks can seize the opportunities in the tide of reform, to defuse the crisis, will be the focus of this study.Interest rate reform is not a simple interest rate liberalization process, which includes the formulation, training of personnel policy in the reform process, the formation of a new management system and many other factors.This article will examine the interest rate reform process, how to ensure long-term prosperity and stability of economic development and financial markets, the reform process and to highlight the problem solutions; how to formulate relevant policies in order to build the new rate system, and domestic the rapid development of commercial banks in the foreign competition.Since the interest rate market reform in developed countries such as the US, Japan and so there have been varying degrees of crisis, and in the handling of the crisis, countries have to be changed, depending on their circumstances. But these phenomena indicate that highly market-oriented interest rates in the future profits of commercial banks and other financial institutions will be greatly affected, in accordance with the characteristics of interest rates, that is, under the impact of market forces, it has the uncertainty and volatility Therefore commercial banks in the market will be at greater risk.Under the highly developed markets, commercial banks face competition in the industry, with the deepening of market-oriented reform of interest rates, and its profits will inevitably face a dilemma decline. The subject of this paper is to study the country’s rapid economic development in the case, the interest rate market demand increasing, how to avoid the emergence of other countries in the process of marketization of interest rates by the problems, taking into account the steady development of China’s commercial banks inevitably will face the opportunities and risks, and how to mitigate risks, is considered in this paper to meet the opportunities a priority.First, the background rate studies are described in detail, and the research results at home and abroad to do the analysis of interest rate reform. And for the actual situation in China, the study established interest rate reform in line with China’s national conditions.The second section identifies the interest rate market-oriented approach and the significance of changes in market interest rates on our financial market system. In view of the actual situation, describes the role of changes in market interest rates in China’s economic development and the development of interest rates, the regulatory system. The necessity and urgency of China’s market-oriented reform of interest are described. Under the control of interest rates, market liquidity is poor, while commercial banks due to the spread relationship, able to maintain a high level of profits, innovation capacity shortage of new financial products. Because the main customer for China’s commercial banks are large state-owned enterprises, but its administrative inefficiency, the more the desire to fund SMEs can not get a loan in the bank, to some extent limit the development of our economy. In the final part of China’s market-oriented interest rate reform process made a detailed presentation.The third chapter is to explore the world through the issues and experience in the process of marketization of interest rates encountered on the market-oriented reform of interest rates to bring inspiration. Focuses on the interest rate market the United States, Japan and South Korea, and analyze them separately and explained that appears in the reform risks and coping strategies, proposed China should implement the "progressive" approach to interest rate reform. And pointed out that the impact of interest rate marketization reform of China’s commercial banks, four major commercial banks will be completely independent, self-financing. The role of policy banks by the National Development Bank.The fourth chapter to commercial bank interest rate market opportunities. After the interest rate market, commercial banks in the market will have greater autonomy in the franchise, not just by virtue of spreads to operate in the face of increasingly large market and customers, opportunities for commercial banks will be greater. Under spreads reduce the profits arising from the situation, financial innovation will occupy a prime location, commercial banks will develop new services and new financial derivatives, to develop intermediate business, expand profit channels.The fifth chapter analyzes the risk of interest rate market opportunities for China’s commercial banks, while the encounter. After fully liberalized interest rates, will face fierce competition in the industry, after the entry of foreign banks in the country, the competition will be more intense. In order to attract capital, commercial bank deposit rates at the tune, and in order to win customers will cut lending rates to some extent. This competition will inevitably lead to squeeze profit margins of commercial banks, the evolution of price competition. At the same time, fierce competition makes commercial banks in order to ensure stable profits, high interest Lanchu moral hazard, high interest rates and lending caused by the adverse selection problem will be greatly increased. After the development of independent interest rate risk will be greatly increased, which will also be the main interest rate market risk.The final chapter proposes how to deal with the risks of commercial banks which brought the interest rate market. First, the further development of financial services, innovative financial instruments; second, to further strengthen the bank interest rate risk management, the formation mechanism of price competition; third, to optimize customer structure, occupying the SME market.