Arab Today, arab today china eyes new tool to liberalise interest rate
Last Updated : GMT 12:45:25
Arab Today, arab today
Arab Today, arab today

China eyes new tool to liberalise interest rate

Arab Today, arab today

Arab Today, arab today China eyes new tool to liberalise interest rate

Beijing - XINHUA

China's central bank is looking to negotiable certificates of deposit (NCDs) as calls for a fully liberalized interest rate grow. In its quarterly monetary policy report released this week, the People's Bank of China (PBOC), the country's central bank, said it will gradually offer NCDs for enterprises and individuals to facilitate the country's interest rate liberalization in an orderly way. Economists expect NCDs could be launched as soon as this year as a step to give people more investment options other than the equity and fund markets. "Since PBOC governor Zhou Xiaochuan said earlier this year that the regulator will completely loosen its control over bank deposits, it is very likely the NCDs will be launched this year," said Lian Ping, chief economist of the Bank of Communications. Currently, the PBOC still controls the interest rates banks can offer to clients, allowing lenders to float a maximum 10 percent upward from the benchmark interest rates. However, the inter-bank interest rates and the lending rates have already been fully liberalized, thus forming a so-called interest rate "dual track" system that many observers say benefits commercial banks with protected interest rate margins and harms depositors. "If NCDs targeting individuals win the go-ahead, it will be an important step forward for China to remove control over interest rates for deposits and let the market decide interest rates," Lian said. NCDs have proved effective in overcoming hurdles in interest rate liberalization in other countries. For example, the U.S. Federal Reserve began issuing NCDs in 1973, which gradually became the main source of funds for banks in the United States. The same monetary tool was also used by Japan and the Republic of Korea when they liberalized interest rates in 1979 and 1994, respectively. The timetable for a fully liberalized interest rate has been set, which will force the early introduction of NCDs, Lian said, adding that a possible roadmap for development of NCDs in China will be "large-denomination and long-term deposits first, with small and short-term deposits later." The new monetary tool will also offer options other than stocks, funds or wealth management products for Chinese investors. Chinese have long been looking for investments that offer much higher yields than the benchmark one-year deposit interest rate of 3 percent, as the government introduced restrictions over property purchases and the performance of China's stock markets remained one of the world's weakest for the past two years. Such a thirst for investment has helped fuel the boom in money funds sold via the Internet and funneled a lot of funds into wealth management products, which are considered part of China's risky "shadow banking" system. Wang Tao, chief economist of UBS, projected that after NCDs, the central bank will then call off the 10-percent upper limit of long-term deposit interest rates, allowing banks to float freely. The interest rates of short-term deposits may come as the last to be fully liberalized, Wang said.

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today china eyes new tool to liberalise interest rate Arab Today, arab today china eyes new tool to liberalise interest rate

 



Arab Today, arab today
Arab Today, arab today Nasima Gamei revives heritage in jewelries

GMT 22:42 2017 Thursday ,23 February

Nasima Gamei revives heritage in jewelries
Arab Today, arab today Saudis await visitors but will they come?

GMT 11:54 2017 Thursday ,23 February

Saudis await visitors but will they come?
Arab Today, arab today Sarah Belamesh designs antiques of "ceramic"

GMT 19:45 2017 Monday ,20 February

Sarah Belamesh designs antiques of "ceramic"
Arab Today, arab today Mental conflict endures

GMT 07:36 2017 Friday ,24 February

Mental conflict endures
Arab Today, arab today Media host Mona Iraqi stresses her show's success

GMT 15:32 2017 Wednesday ,22 February

Media host Mona Iraqi stresses her show's success
View News in Arabic - Business: مصارف
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today To hold social dialogue over secondary school

GMT 07:43 2017 Wednesday ,22 February

To hold social dialogue over secondary school
Arab Today, arab today UK appoints 1st Scotland Yard chief in 188 years

GMT 05:14 2017 Thursday ,23 February

UK appoints 1st Scotland Yard chief in 188 years
Arab Today, arab today Ex-yoga missionary unleashes rage

GMT 12:16 2017 Thursday ,23 February

Ex-yoga missionary unleashes rage
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Tesla back into red but revenue grows

GMT 07:27 2017 Thursday ,23 February

Tesla back into red but revenue grows
Arab Today, arab today Nissan enhances sales in most markets

GMT 14:08 2017 Monday ,20 February

Nissan enhances sales in most markets
Arab Today, arab today Wafaa Amer is happy for Sherihan’s return

GMT 07:36 2017 Wednesday ,22 February

Wafaa Amer is happy for Sherihan’s return
Arab Today, arab today Milan laughs while Rome cries

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries

GMT 05:19 2017 Tuesday ,21 February

Salma Rashid happy for 'A Whisper of Love'

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby

GMT 20:02 2017 Tuesday ,21 February

Nohan Seyam designs beautiful accessories

GMT 15:53 2017 Tuesday ,21 February

Small ponds have outsized impact

GMT 23:29 2017 Thursday ,16 February

Home built on sand castles-style costs $8m

GMT 07:51 2017 Wednesday ,22 February

Mom's immune system accepts babies

GMT 17:46 2017 Saturday ,18 February

Tourist guide reveals methods of tourist attractions

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 12:22 2017 Monday ,20 February

Kanye West puts hijab-wearing model
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday