Deposit and Lending Interest Rate Liberalization Reforms: Challenges, Pathways, and Policy Options

“Steadily advancing interest rate liberalization reforms” is a strategic initiative for adjusting China’s financial system and improving the monetary policy regulation. It is also a priority and challenge in deepening financial reforms. The idea of interest rate liberalization reforms in China was put forth as early as in 1993. Since 1996, China has implemented interest rate liberalization reforms by following the approach of “taking the first step of reform for foreign currencies before the home currency, loan interest rate before deposit interest rate, long-maturity before short-maturity, and large-sum transactions before small-sum ones.”