The Chinese Interbank Markets： Cornerstone of Financial Liberalization
摘要
In modern financial system, interbank markets play a crucial role. This article intends to give a thorough analysis of the Chinese interbank markets and their influence on further financial liberalization in China. The analysis shows that over the last two decades, the Chinese interbank market has developed from an anarchic funding situation to a robust modern interbank market, allowing for an efficient allocation of short-term funds and securing short-term liquidity for banks. And with the reforms of the interbank funding market, an efficient allocation of medium-term funds between institutions and regions should be achieved. However, the large non-performing loans (NPLs) of China's banks still pose a major impediment to full liberalization of interest rates. Hence, the Chinese regulatory authority is still reluctant to speed up the necessary interest rate reforms.