China cenbank issues rules for interbank certificates of deposit
BEIJING Dec 8 (Reuters) - China's central bank released guidelines for financial institutions issuing interbank certificates of deposit on Sunday, the latest step in its plans to let market forces determine interest rates.
In a statement on its website, the People's Bank of China said that under the new rules, new CDs cannot be less than 50 million yuan ($8.2 million) per issuance, and issuers must tell the central bank in advance of the total amount they plan to issue in a year.
China's leaders are seeking to steer the world's second-latest economy towards a growth model that relies more on domestic consumption and want to gradually allow market forces to play a greater role.
In September, the central bank said it would allow banks to launch certificates of deposit to pave the way for liberalising bank deposit rates.
Sunday's statement said CDs issued with fixed rates must be no longer than one year in duration, and must use the Shanghai interbank offered rate (SHIBOR) as the benchmark. Those with floating rates should be longer than one year in duration.
CDs can be traded, it added. The new rules go into effect on Dec. 9.
It said the new rules were aimed at "regulating the interbank deposit business, expanding financing channels and promoting the development of the money market".
In July, the PBOC scrapped the floor on lending rates but banks still price their loans based on the benchmark rates when they make loans. The one-year official rate stands at 6 percent.
The decision to remove the lending rate floor was seen as a largely symbolic prelude to eventually removing caps on deposit rates, a much more difficult task that will take time. ($1 = 6.0817 yuan) (Reporting by Jonathan Standing; Editing by Nick Macfie)
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