Study On The Choosing Of Benchmark Interest Rate Of Money Market In China

In 1996,the market-oriented reform of China's interest rate was officially launched.After two decades of reform,China completely lifted its control on interest rate in October 2015.Now monetary policy regulation is changing from the quantity control to price control.China' s money market is lack of a real benchmark interest rate for a long time.While The benchmark interest rate of money market,which is also the one of the whole financial market,is the core of the entire interest rate system.It is very important,both theoretically and practically,to study the problem of selecting the benchmark interest rate of China' s money market.The first step of this paper is to define the concept of the benchmark interest rate of money market,and analyze its characteristic and summarizes general principles which pave ways for the following empirical analysis.Then this paper focuses on two markets:the interbank lending market and the interbank bond repo market,especially for the development of China's two markets were the inadequacies of the current situation and more fully described and identified in the two markets leading interest rate varieties.Afterwards,this paper is to make a qualitative analysis in accordance with criterion of the benchmark interest rate determination.Then this paper suggests the choice of the benchmark interest rate of China's money market should be between shanghai interbank offered rate(shibor)and interbank bond repo rate.Next,based on empirical researches,this paper emphatically compares the advantages and disadvantages shanghai interbank offered rate(shibor)and interbank bond repo rate would have if they were the benchmark interest rate of China's money market.The empirical results show that interbank bond repo rate,in respect of marketability and fundamentality,is more suitable than shanghai interbank offered rate as benchmark interest rate of money market.In respect of correlativity and stability,interbank bond repo rate performs fairly well with shanghai interbank offered rate.This paper through the analyses and researches mentioned above,suggests the best choice of the benchmark interest rate of China's money market at present should be interbank bond repo rate and then offers some policy proposals.