A Brief Talk on the Market-Oriented Interest Rate Reform in China 金融英语.docxVIP

University of International Business and Economics Semester one,2014 — 2015 School Year Paper Title: A Brief Talk on the Market-Oriented Interest Rate Reform in China Course Name Financial English Student Number 20141810214 Student Name School Name School of International Trade and Economics Major Name Master of Finance PAGE \* MERGEFORMAT4 1. What is market-oriented interest rate reform? Interest rate marketization refers to the financing interest rate level that financial institutions finance in the money market. It is determined by the supply and demand in market, including the interest rate decision, the interest rate transmission, the structure of interest rates and interest rate management. In effect, it is the financial institutions that own the policy making right of interest rates, that is, financial institutions adjust the interest rate on their own according to their capital situations and their judgment of how financial market will go, which results in the fact that a market interest rate system, which is determined by the supply and demand in market, is established through the money market interest rate based on the benchmark interest rate set by PBC. 2. Why is the market-oriented interest rate reform expected to carry out in China? a. Widely adopted in developed economies China should take more action to promote steady and unwavering marketization of the current rigid interest rate regime, a practice that is widely adopted in developed economies such as the United States and Japan. b. Lack of normal reflection and transmission The practice of setting the ceiling and bottom interest rates for deposits and loans - to prevent any possible vicious competition among commercial banks for market share - has often meant the countrys interest rate level has failed to reflec