Feasibility Research On Whether SHIBOR Should Become Our Benchmark Interest Rate

To confirm the benchmark interest rate is the way of interest rate liberalization, and also the base and ensuring of financial market reform. But choose what kind of interest rate as the basis of our financial market interest rates have no final conclusion, which not only stalls off our interest rate and exchange rate liberalization process, but also impedes the full development of the financial markets. It can not be procrastinated any more to select the appropriate rate of our financial markets as a benchmark interest rate.SHIBOR, published by People's Bank of China in 2007, provides a new option for benchmark interest rate. SHIBOR measures up the standards of benchmark interest rate, running stably from the beginning and its data is continuous, lots of financial products price refering to it. SHIBOR's influence is rapidly increasing in our currency market, even the whole financial market.Therefore, many scholars proposed that SHIBOR should be our benchmark interest rate and analysed the feasibility from various angles; on the contrary, other scholars thought there were some flaws in SHIBOR, and it was inadequate to act as our benchmark interest rate unless it keep growing.Based on the extensive research, this dissertation further verified the feasibility of SHIBOR as our benchmark interest rate. From the classical interest rate decision theories, this paper discussed the importance of benchmark interest rate in the market-oriented economic environment, then, verified SHIBOR with the four benchmark interest rate characteristics, qualitatively concluding that SHIBOR could be our basis rate, and next, prove the conclusion by mathematical model, and last, gave serious policy recommendations to improve SHIBOR.