Analysis:

Interest rate structure

(A) the risk structure of interest rates

Interest rate risk structure refers to the relationship between interest rates of various credit instruments with the same term.

The determinants of interest rate risk structure are:

1. Default risk: The greater the default risk of credit instruments, the higher the interest rate. Conversely, the lower the interest rate. National debt has almost no risk and can be regarded as a bond without default risk. Generally speaking, we call the spread between risky bonds and risk-free treasury bonds "risk compensation" or "risk premium".

2. Liquidity: The stronger the liquidity of bonds, the easier it is to realize and the lower the interest rate. Conversely, the weaker the liquidity, the higher the interest rate.

3. Tax factors: As * * * has different tax treatments for different bonds, interest rates are also affected. The higher the tax rate, the higher the pre-tax interest rate of bonds.

(B) Term structure of interest rates

Term structure of interest rate refers to the relationship between interest rates of bonds with different maturities.

There are three types of relationship between interest rate and term: (1) horizontal type-indicating that interest rate has nothing to do with term; (2) It means that the interest rate is a gradual increasing function. The longer the term, the higher the interest rate, the shorter the term and the lower the interest rate. (3) Decreasing type-indicating that the interest rate is a decreasing function of the term. The longer the term, the lower the interest rate, the shorter the term and the higher the interest rate.

Economists analyzed the internal mechanism of the term structure of interest rates and formed the term structure theory, the most important of which is the expectation theory. The explanation for the different interest rates of bonds with different maturities lies in the different expectations of future short-term interest rates.

interest rate liberalization

Interest rate marketization means that the interest rate level of financial institutions operating and financing in the money market is determined by market supply and demand, including interest rate determination, interest rate transmission, interest rate structure and interest rate management marketization. In fact, it is to hand over the decision-making power of interest rate to financial institutions, which will adjust the interest rate level independently according to the capital situation and the judgment of financial market trends, and finally form a market interest rate system and interest rate formation mechanism based on the central bank's benchmark interest rate, with the money market interest rate as the intermediary, and the deposit and loan interest rate of financial structure determined by market supply and demand. For a long time, the marketization of interest rate has been a hot issue in China financial circles. Since 2000, the interest rate marketization reform, which has been widely concerned by people, has finally taken the first step: with the approval of the State Council, China's foreign currency interest rate management system has been reformed since September 2 1 2000. First, the interest rate of foreign currency loans has been liberalized, and financial institutions will independently determine the interest rates of various foreign currency loans and their interest settlement methods according to changes in international financial market interest rates, capital costs, risk differences and other factors.

First, the external macro-environment analysis of interest rate marketization in China.

1. Analysis of international environmental factors

Since 1980s, interest rate liberalization has become the trend of international financial market, and the United States succeeded in March 1986.

Realized the marketization of interest rates, and finally Japan successfully realized the marketization of interest rates at 1994+00.

2. Analysis of the impact of China's entry into WTO.

After China's entry into WTO, five years later, the geographical and customer service restrictions for foreign banks to carry out RMB business will be lifted, and they can operate retail banking business, and all banking business will be completely liberalized.

3.

Analysis of the influence of foreign exchange management policy. Promoting the interest rate marketization reform can not only narrow the spread between local currency and foreign currency, but also reduce the policy pressure of implementing foreign exchange control, making it possible to actively and steadily open more communication channels between local currency and foreign currency.

4. Analysis of the development trend of international financial market. interest rate liberalization

The reform not only creates conditions for financial institutions to expand their scale, but also provides opportunities for future RMB capital projects.

Exchange creates conditions. At the same time, the adoption of capital market tools by financial institutions in the future is also market-oriented.

Large-scale mergers and acquisitions have created conditions.

Second, the internal environment analysis of interest rate marketization in China.

1. The fiscal deficit has been year after year, and there are hidden dangers in macroeconomic stability.

2. The benign competition between the commercial banking system and financial institutions has not yet formed, and the financial supervision system is not perfect.

3. The operating conditions of state-owned enterprises are not good, and the soft budget constraints have not been eliminated.

Affected by the Asian financial crisis and its long-term accumulated institutional and structural disadvantages, the domestic market demand is generally insufficient at present, and the interest rate has been adjusted to a very low level.

(Please refer to the handout for the above restrictions on the role of interest rates in China. The above description is simpler. )

All these indicate that interest rate liberalization in China is a complicated and sensitive policy, which should be implemented cautiously.

China liberalized the interbank lending rate on 1996, which took a solid first step towards interest rate marketization. Then, the market interest rate of national debt was liberalized, and a good interest rate formation mechanism between the money market and the national debt market was gradually established, which also determined a benchmark interest rate for adjusting interest rates. This laid the foundation for the marketization of interest rates. Next, China should first adjust the interest rate structure, reduce the legal interest rate from more than 200 to about 30, and adjust the interest rate more frequently according to the economic operation, at the same time, improve the money and capital markets, enrich the trading varieties in the market, and gradually expand the proportion of market interest rates in corporate financing. When the commercialization of state-owned banks is progressing smoothly, the competition level of the banking system is improved and the supervision mechanism is perfect, we can consider gradually expanding the freedom of commercial banks to determine the loan interest rate and liberalizing the loan interest rate. If banks operate well and the reform of state-owned enterprises makes progress, deposit interest rates can be gradually liberalized. Through this step-by-step and step-by-step reform, the interest rate will finally be fully marketized.

Judging from the relatively successful experience of interest rate marketization reform in the United States and Japan and the lessons of failure of interest rate marketization reform in Argentina, the following aspects are worth learning from in the process of promoting interest rate marketization in China:

(1) The macroeconomic situation determines the timing of reform.

(2)

The degree of financial micro-infrastructure construction restricts the practice speed of reform. Most people successfully cultivated the financial market and improved the financial institutions before liberalizing the interest rate, while those without a solid market foundation rashly completely relaxed the interest rate control, which ended in failure.

3) Establish an effective supervision system and appropriate laws and regulations to replace direct intervention in interest rates and finance.

In the process of interest rate marketization and financial liberalization, it is necessary to establish an appropriate and prudent management system, formulate high-quality supervision standards, conduct strict and effective bank supervision and evaluate bank risks. This is very important for the financial system to play a successful role after interest rate liberalization.

(4) The interest rate marketization reform must be comprehensively considered and implemented step by step.

Experts from the International Monetary Fund and the World Bank believe that only when a country's macroeconomic stability and bank supervision are completely effective can interest rate marketization be realized quickly, otherwise it needs a process of creating conditions.

(5) The marketization of post-interest rate should be stopped as soon as possible.

After the marketization of interest rates, due to the relaxation of other controls on banks, it will cause a common problem: a large amount of funds from financial institutions will flow to underdeveloped industries that can appreciate rapidly under the background of regulation.