From the South China Morning Post, August 17:
- Chinese
central bank selects 18 lenders, including two foreign ones, to submit
monthly rates that will be used to determine benchmark
- People’s Bank of China says it will lower financing costs for corporate and individual borrowers
China
has changed its system for deciding bank lending rates so that the
central bank can effectively influence and control interest rates, a
significant move in the world’s second-biggest economy.
The
change – part of China’s long-standing pursuit of a market-based
central banking structure – comes as the country’s economic growth is
losing steam amid a protracted trade war with the United States and as
Beijing seeks to cut financing costs for struggling small firms.
Under
the new system, a club of 18 lenders selected by the People’s Bank of
China will submit their one-year and five-year loan prime rates (LPR) –
the lowest rate offered to their best clients – to the central bank on a
monthly basis, the PBOC said in a statement on Saturday.
The
central bank will calculate the average of those rates and publish it
at 9.30am on the 20th of every month, starting from Tuesday, as the
benchmark rate for the whole banking industry to follow.
It
said the rate-setting group had been expanded to 18, from an existing
group of 10 big banks, to “make [the group] more representative” by
including foreign banks, rural commercial banks, city commercial banks
and even private banks.
The
foreign banks are Standard Chartered and Citigroup, according to an
interbank rates website run by the PBOC. HSBC, which has the largest
assets scale and number of outlets among foreign banks operating in
mainland China, was not included in the rate-setting group.....
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