On The Interest Rate Market Conditions And Processes

As the change of economic and financial regime of China with its openness, the issue of marketlizing interest rate become an emergent step in the process of economic and financial reform in China. In order to proceed financial regime reform and meet the challenge of globe economy, this thesis discussed that how to implement interest rate reform in China at the current stage of developing market economy. Firstly the paper reviewed the history of reform over interest rate by Chinese government since 1949. Secondly, author analyzed a positive role of free interest rate on the growth of national economy based on the reality of China and other country's experience. Then author derived the necessity of marketlization interest rate from the environment of the fast growing economy and requirements of WTO. On the other hand, author discussed two questions especially: First, why is in a situation that we have fully realized the importance of interest rate marketlization, the reform of interest rate in China is still slow at present? Second, how should on earth carry on the reform of interest rate? Author also discussed obstacles, conditions and corresponding governance policies for interest rate reform. More than that, some proposed specific policies and its operation mechanisms were provided by author.The thesis was constructed as followings. Chapter one analyzed the necessity of interest rate reform and clarified the boundary between definitions of interest rate regulation and interest rate marketlization. Based on reviewing historical effects of interest rate policy, chapter two concluded that interest rate policy is one of most effective indirect monetary tools among macroeconomic policies. Besides, throughanalysing the effect of the present policy of interest rate of China, author pointed out that the marketization of interest rate is the inevitable choice that the finance of China deepens. Chapter three reviewed theories and historical arguments over the interest rate marketlization, constructed theoretical basis for interest rate marketlization, and analyzed the slowness of China's interest rate reform. Chapter four analyzed the China's current economic conditions, its strengthness and weakness for marketlizing interest rate. Finally, author suggested some specific reform policies, its implementing schedule and corresponding risk avoiding mechanisms.