China plans next financial reforms
China mapped out its next steps in crucial financial reforms on Tuesday, saying that it would look to make the yuan more flexible and free up interest rates, while launching stock index futures in early 2007, Reuters reported.
Reuters quoted central bank deputy governor Wu Xiaoling as saying that "To deepen financial reforms, we must make interest rates more market orientated and make the exchange rate more flexible."
On interest rates, the central bank would look to simplifying the maturities on deposit and lending rates and would prepare to abolish limits on the spreads between lending and deposit rates.
"I think that what they will do perhaps is that they will only set up a benchmark rate for one year (maturities) and allow the market to determine the rates for other maturities," said Wang Qing, an economist with Bank of America in Hong Kong, "Maybe in the future, even this one-year benchmark rate will be abolished."