Federal Reserve Bank of San Francisco

China’s Interest Rate Liberalization Reform

May 12, 2014

Author(s): Cindy Li

As a key component of China’s overall economic and financial reform blueprint, interest rate liberalization is now high on the policymakers’ to-do list. Appropriate timing, pace, and sequencing are crucial factors that will determine if China will be able to reap the full benefit of a market-based interest rate environment while minimizing disruptions to the domestic economy.

This Asia Focus report explains the importance of interest rate liberalization in China, reviews historical progress and current efforts made to date, and discusses the potential impact on the banking sector.

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