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BOAO, China, April 10 China will choose a proper
time to liberalise bank interest rates and gradually reduce its
currency intervention to give the yuan more freedom to move,
central bank governor Zhou Xiaochuan said on Thursday.
"We will choose a proper time to widen the floating range of
deposit rates," Zhou told reporters and delegates during the
annual Boao forum.
Zhou said last month deposit rates were likely to be
liberalised in one to two years, but government economists and
policy advisers told Reuters they believed the central bank was
treading cautiously as economic growth slow.
The central bank is widely expected to introduce a deposit
insurance scheme before liberalising deposit rates to protect
savers in case a freed-up market leads to major turbulence for
Analysts expect the controls on deposit rates to be lifted
gradually. The current ceiling on deposit rates is 110 percent
of the benchmark set by the central bank.
Zhou reaffirmed that the People's Bank of China would
gradually exit from regular intervention in the foreign exchange
market to give the yuan more breathing space.
"The renminbi (yuan) floating range has been expanded to 2
percent from 1 percent, the next step will be moving in this
direction," he said without elaborating.
Last month, the PBOC loosened its grip on the yuan by
doubling its daily trading band, adding teeth to a promise it
would allow market forces to play a greater role in the economy.
China will further encourage mainland firms to issue yuan
bonds in Hong Kong and support Hong Kong firms to issue panda
bonds on the mainland, Zhou said.
(Reporting by Aileen Wang in Boao and Kevin Yao in Beijing;
Editing by Robert Birsel)