China poised to further interest rates reform

China's central bank, the People's Bank of China (PBOC), said Thursday that China is ready to carry forward marketization reform of interest rates.

The PBOC will continue to actively push forward the process, while giving full consideration to the economic and financial situations both at home and abroad, a statement on the central bank's website said.

The reform will be conducted "fully considering the global and domestic economic and financial situations," as well as other conditions and influences, said the statement.

In an exclusive interview with Xinhua Sunday, the PBOC governor Zhou Xiaochuan said that the pace of China's interest rate reform has been hampered by the current financial turbulence.

"It is not a very good time to push forward market-oriented interest rates," he said.

But the POBC statement said the reform will be further promoted during the 2011-2015 period, and start with qualified financial institutions. The interest rates will be decided by market competition, said the statement, citing an article written by Zhou.

The marketization reform of interest rates should be conducted in a fair market, which is, at the moment, not ready with effective restraints and might hurt the benefits of bank clients.

Beside deposit and lending rates, the central bank is also considering promoting a gradual marketization of financial derivatives by allowing their pricing to be decided by market competition, Zhou's article said.

Both bank clients and commercial banks should be prepared for the marketization reform of interest rates, it added.

China's one-year lending rate stands at 6.56 percent, while its one-year deposit rate is 3.5 percent.