Will Liberalization Of Foreign Currency Interest Rates Trigger Interest Rate Wars?

< p > the world is < a href= "http://www.91se91.com/" target= "_blank" > clothing < /a > a href= "http://www.91se91.com/" target= "http://www.91se91.com/".

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After the liberalization of small foreign currency deposit interest rates in the Shanghai free trade area (P) in March 1st, there was no increase in the interest rate of interbank deposits and the frequent relocation of depositors' deposits.

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< p > according to media reports, the Shanghai headquarters of the people's Bank of China announced on the morning of June 26th that the pilot reform of small a href= "http://www.91se91.com/news/index_cj.asp" > foreign currency deposit < /a > interest rate limit was extended to Shanghai from June 27th.

On the basis of fully assessing the effect of the market pricing of foreign currency deposits in Shanghai, the pilot work will open the upper limit of the interest rate of small foreign currency deposits of individual customers.

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< p > all along, the interest rate liberalization of the relevant departments is based on the following principles: "first foreign currency, then local currency; first loan and post deposit; first long term, large volume, short term and small amount".

Since March 1st this year, the relevant departments have determined that the Shanghai free trade zone will take the lead in achieving the full marketization of foreign currency deposit interest rates in the whole country, and take a step forward in the market pricing of debt products.

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The problem of interest rate marketization has been put forward for more than a decade. In the past few years, although the measure of deposit interest rate and the lower limit of loan interest rate has been launched, it is far from the real interest rate marketization. In the credit field of China, there are two yuan phenomena, namely, the cold and hot uneven, and the interest rate level is bad.

The liberalization of small foreign currency deposits in enterprises and individuals within the Shanghai area may be caused by the interest rate wars between banks and the foreign currency deposits in the banks.

Therefore, 15 banks have set up the "market order self-discipline committee", trying to prevent foreign currency deposit interest rate war.

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< p > no matter whether the market order self-discipline committee is a trade association or a price alliance nature, in fact, it is not necessary to worry about the interest rate war that will result in the liberalization of foreign currency small deposit interest rate.

For reference, after the liberalization of the small foreign currency deposit interest rate ceiling in the Shanghai free trade area in March 1st, there was no increase in the interest rate of interbank deposits and the frequent relocation of depositors' deposits.

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< p > although the Shanghai free trade zone is still far away for most residents, it is not convenient to move deposits. However, it is not expected that this will happen after the liberalization of the interest rate ceiling for small foreign currency deposits has been extended to Shanghai.

The reason is that the interest rate of foreign currency in the domestic market has the reference of the international market, and will not go out of the market out of line with the overseas market alone.

Just like China's copper futures market, because of strong overseas market reference, the trend of Chinese market is basically the same as that of overseas market.

The trend of interest rate of foreign currency deposits will be repeated after marketization.

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< p > the current interest rate of small foreign currency deposits is issued by the central bank in May 2005, and the US dollar one-year fixed deposit interest rate limit is 3%.

However, at present, the US dollar one-year fixed deposit rate ranges from 0.5%~2.7% to the national average of 1.076%, while ICBC and BOC are currently about 0.8% and 0.75% respectively.

In the United States, the current one-year CDs interest rate is near 0.7%, which is close to the one-year deposit interest rate standard of mainstream Chinese banks.

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< p > the annual interest rate of the LIBOR (London Interbank Offered Rate) is 0.55%.

International foreign currency loans generally add hundreds of base points above the LIBOR interest rate, while the deposit interest rate is very close to the LIBOR interest rate.

Therefore, there is a LIBOR interest rate to guide the interest rate of foreign currencies in the world, with reference to the mainstream deposit rates of the countries where the foreign currencies are located. The real interest rates of foreign currency deposits of Chinese banks, including foreign banks, will not deviate too much from the international mainstream interest rates.

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At present, the benchmark interest rate in the US is still at the zero interest rate of 0-0.25%. The benchmark interest rates in Japan, the euro area and Switzerland are also in the category of zero interest rates. The euro area is implementing the negative interest rate policy of overnight deposits of commercial banks. Therefore, the interest rates of the mainstream foreign currencies in the world are at a very low level.

China's foreign currency deposit interest rate will not be too high.

Even if there are some subtle differences in interest rates among banks, the difference in interest generated by small deposits must be negligible. Depositors generally do not move big deposits, because the tiny interest rate gain from that slight interest rate difference is not enough to cover the cost of friction caused by conversion deposits.

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< p > in fact, the experience brought about by the interest rate liberalization of small foreign currency deposits can be used for reference in the marketization of interest rates of < a href= "http://www.91se91.com/news/index_cj.asp" > RMB > /a > deposits.

At present, China's stock of money is at the top level of the world. The reason why deposit and loan interest rates seem to be higher is due to the blockage of monetary channels or the accumulation of currency and cash. Once the channel is clear, the interest rate of the RMB will also be greatly reduced, and the RMB interest rate liberalization will also be promoted.

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