{"id":372,"date":"2015-08-31T09:31:38","date_gmt":"2015-08-31T15:31:38","guid":{"rendered":"https:\/\/trends.ufm.edu\/en\/?post_type=articulo-semanal&p=372"},"modified":"2016-11-28T15:32:38","modified_gmt":"2016-11-28T21:32:38","slug":"china-liberalizing-its-financial-system","status":"publish","type":"articulo-semanal","link":"https:\/\/trends.ufm.edu\/en\/article\/china-liberalizing-its-financial-system\/","title":{"rendered":"China liberalizing its financial system?"},"content":{"rendered":"

By Ricardo Rivera August 31, 2015<\/p>\n

rrivera@ufm.edu<\/a><\/p>\n

Translated from Spanish by Andr\u00e9s Contreras<\/p>\n

 <\/p>\n

Interest rate policy in China is decided by the Monetary Policy Committee of The People\u2019s Bank of China (PBOC). The committee recently cut its benchmark interest rate by 0.25% and lowered the benchmark deposit rate from 3.5% to 3.25%.<\/p>\n

This rate cut came only a few weeks after the PBOC injected more than 200 billion Yuan (approximately USD 32.5 billion) via short-term liquidity operations<\/em>. In addition, it lowered the reserve requirement ratio for banks by 0.5%.<\/p>\n

The month of August was busy for the PBOC with many financial policy changes in response to the plunge of the Shanghai Composite Index<\/em> and a slow recovery in Chinese exports. Beyond helping to cope with the FED\u2019s potential interest rate rise, the PBOC\u2019s moves will open small but important areas for business activity in the financial system.<\/p>\n

A lower bound for lending rates and saving rates will give way to a rise in competition among financial institutions, in what will be a marked revitalization of credit. The government\u2019s prior interventions, which resulted in brutal stock market volatility, were apparently aimed at increasing liquidity for the industrial sector in order to boost exports. Now, as far as we know, this new revitalization of credit does not seem to target any specific sector of the economy.<\/p>\n

This will trigger a more efficient allocation of resources since the lending rate is too high relative to the savings rate. We must recall that within the Chinese Government\u2019s agenda there has been a consistent push to widen the country\u2019s vigorous domestic market. Much can\u2019t be said about the Communist Party\u2019s intentions, however what is certain is that these new areas of \u201cliberty\u201d opened by recent policy will not be retaken easily by the Party insofar as they improve living standards in China.\u00a0\u00a0<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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