China liberalises bank lending rates
POSTED: 19 Jul 2013 7:41 PM
China's central bank said Friday it will scrap all controls on lending interest rates and let financial institutions set rates by themselves.
BEIJING: China's central bank said Friday it will scrap all controls on lending interest rates and let financial institutions set rates by themselves.
The move, a key step in plans for liberalising the country's interest rate regime, will remove a floor on lending rates set at 70% of benchmark lending levels set by the central bank.
The People's Bank of China said in a statement on its website that the move will reduce financing costs of domestic companies and improve the allocation of financial resources.
"This will support the real economy and improve economic restructuring and upgrading," the central bank said.
The central bank also said it would remove controls over bill discount rates. But it did not make any changes to its curbs on deposit rates or its policies on mortgage lending.
The People's Bank of China said that relaxing controls on bank deposit rates is a risky process that needs mature market conditions, so it will be carried out gradually.
The new rules come into effect on Saturday.
- CNA/ir
- wong chee tat :)
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