Influence Of Interest Rate Marketization Reform Of China’s Financial System Stability

Interest rate liberation is an important section to promote financial liberalization and deepen the reform of the market system.However,with the process of interest rate liberation, most of the countries, especially the developing countries, have the financial risk accumulation and even financial crisis unavoidably.China,as a major developing economy, has been carried out the reform of interest rate reform for more than ten years. whether studying the reform of interest rate liberation is an stable impact on financial system, is an important research subject.This paper firstly studies the theory relationship and the mechanism of action between the interest rate liberation and financial stability through the mechanism analysis on the relationship between the interest rate liberalization and financial stability. Secondly,this paper uses the reform experience of interest rate liberation countries, analyses fluctuations of reform of interest rates liberation’s influence on the financial system, and also analyses the international experience’s revelation on interest rate liberation of our country. Thirdly,through settling the theory relationships between interest rate liberation and financial stability, this paper builds model to analyze interest rate liberalization’ influence on the financial system, real economy, the macroeconomic level, on this account, analyses the influence of interest rate liberation on financial stability. Finally, aiming at the specific condition of interest rate liberation of China, this paper discusses the financial system stability mechanism construction of China.This paper draws the following conclusions:Interest rate liberation can promote financial stability under certain macroeconomic conditions.But, based on the vulnerability of the financial system,interest rate liberalization,as an important policy of financial reform would have a certain impact on financial stability.The way of interest rate liberation reform has obvious influence on the stability of the financial system. According to the experience of the international interest rate liberation reform, China choose the gradual reform method,which,to some extent, reduces the financial volatility. Interest rate liberation affects financial stability through investment, consumption, loans, market interest rates, inflation and the speed of money supply. Interest rate liberation’s influence on financial stability needs certain mechanism to complete it, including macro-control mechanism, benchmark interest rate decision mechanism,money market trading mechanism,risk control mechanism,cooperation mechanism of financial institutions,financial supervisory mechanism.