SHANGHAI Feb 26 China will completely
liberalise interest rates offered on smaller foreign currency
accounts in the Shanghai free trade zone (FTZ), the central bank
said on Wednesday.
The People's Bank of China (PBOC) will abolish the upper
limits on deposit rates offered by banks on foreign exchange
accounts holding below $3 million as from March 1, the central
bank's Shanghai headquarters said in a statement published on
its website, shanghai.pbc.gov.cn.
The reform will primarily benefit smaller customers in the
zone, as lending rates and deposit rates on accounts holding
more than $3 million have been liberalised throughout China
China launched the Shanghai FTZ in September 2013 to help
experiment with economic reforms, in particular financial
innovation, hoping successful experiments there could eventually
be duplicated throughout the country.
However, the FTZ has so far proven a disappointment to those
who expected quick, radical change. Few multinationals have
relocated to the zone given its distance from Shanghai's central
business district, the FTZ's stratospheric rents thanks to
rampant speculation and uncertainty over which reforms will be
rolled out when.
The cautious nature of this latest reform highlights
regulatory caution over the major steps authorities have
promised to enact in the zone, namely testing the full
convertibility of the yuan and liberalising rates on
yuan-denominated deposits. The latter is seen as the crucial
lever for restructuring China's financial system.
(Reporting by Lu Jianxin and Pete Sweeney; Editing by Richard