Information about Asia and the Pacific Asia y el Pacífico
Front Matter

Front Matter

Hassanali Mehran, Marc Quintyn, and Bernard Laurens
Published Date:
December 1996
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Information about Asia and the Pacific Asia y el Pacífico
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Interest Rate Liberalization and Money Market Development

Selected Country Experiences

Proceedings of a seminar held in Beijing July/August 1995


Hassanali Mehran

Bernard Laurens

Marc Quintyn

Monetary and Exchange Affairs Department

International Monetary Fund

© 1996 International Monetary Fund

Cover design by IMF Graphics Section

Library of Congress Cataloging-in-Publication Data

Interest rate liberalization and money market development : selected country experiences / editors, Hassanali Mehran, Bernard Laurens, Marc Quintyn

  • p. cm.
  • Proceedings of a seminar held in Bejing, China, in August 1995, sponsored by the Monetary and Exchange Affairs Department (MAE) of the IMF together with the People’s Bank of China
  • ISBN 1-55775-563-9

1. Interest rates—Cross-cultural studies—Congresses. 2. Money market—Cross-cultural studies—Congresses. 3. Capital market—Cross cultural studies—Congresses. 4. Monetary policy—Cross-cultural studies—Congresses. 5. Securities industry—Deregulation—Cross-cultural studies—Congresses. I. Mehran, Hsssanali. II. Laurens, Bernard. III. International Monetary Fund. Monetary and Exchange Affairs Dept. IV. Chung-kuo jen min yin hang.

HG1621.I584 1996




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This book presents the proceedings of a seminar on Interest Rate Liberalization and Money Market Development held in Beijing, China, in August 1995, sponsored by the Monetary and Exchange Affairs Department (MAE) of the International Monetary Fund together with the People’s Bank of China (PBC).

MAE has been heavily involved in the monetary, exchange, and financial sector reforms in China since 1991. The staff advisory work on China initially focused on central banking and commercial banking legislation, with contributions from the Legal Department of the IMF. Assistance to China on the exchange system and financial sector was carried out through a series of advisory missions and parallel workshops organized for this purpose.

The purpose of this seminar was to invite central bankers from different parts of the world to discuss with senior Chinese government officials their experiences with aspects of central banking related to interest rate liberalization and money market development. The seminar was held in the context of new impetus given to economic reform in China, in which financial reforms are viewed as a key element for macroeconomic management in a market environment. In particular, the establishment of nationally integrated money markets and increased domestic interest rate flexibility is becoming highly desirable, now that the exchange rate has been unified and much progress has been accomplished toward convertibility of the renminbi.

The seminar was hosted by the PBC’s Funds Planning Department. The sessions were chaired by Hassanali Mehran, Senior Advisor, MAE, and Zhou Zhongming and Zhon Qirui, Deputy Directors of the Funds Planning Department. Experts from the Bank of Italy (Giorgio Gobbi), the Bank of Korea (Jae-Chun Kim), the Bank Negara Malaysia (Zamani Abdul Ghani), the Bank of Thailand (Suchada Kirakul), and Mr. Rüşdü Saraçoğlu, former Governor of the Central Bank of Republic of Turkey, presented papers on their respective country experiences in relation to the issues discussed during the seminar. (The papers in this volume are in the order of their presentation at the seminar.) The diversity of countries represented reflects specific interests of the Chinese authorities, such as a better understanding of the Italian and Turkish models of interbank markets and the experiences of neighboring Asian countries (Korea, Thailand, Malaysia) with interest rate liberalization. Moreover, Victor Chang, Chairman of V.C. Management, and formerly with the Federal Reserve Bank of New York, participated as a discussant presenting the U.S. experience. The sessions were attended by some 40 Chinese participants drawn from the PBC, commercial banks, the State Planning Commission, the ministry of finance and other government economic agencies. This book includes the papers presented by these experts together with two papers on the PBC’s current plans to gradually liberalize interest rates and establish a nationally integrated interbank market, which were presented by Xie Ping and Zhong Qirui (both from the PBC). An introduction to the papers presents a summary of the discussions and brings together the common themes, focusing on the policy implications that flow from the experiences of the different countries as described in the country papers.

I wish to thank the authors for their papers. Within the Fund, many people have contributed to the successful organization of the seminar and the production of this volume. I would like to mention in particular the work of the editors and my colleagues in the European I Department, the Western Hemisphere Department, and the Central Asia Department, in particular Douglas Scott, the IMF Resident Representative in China at the time of the seminar, for their comments on these papers. Also to be thanked are Kiran Sastry (Research Assistant, MAE), who prepared the charts, Charmion O’Connor (Administrative Assistant, MAE), who prepared the manuscript, and Marina Primorac (External Relations Department), who skillfully edited the text and coordinated its production and publication.

Manuel Guitián


Monetary and Exchange Affairs Department International Monetary Fund



automatic teller machine


Bank for Agriculture and Agricultural Cooperatives


Bangkok International Financing Facilities


Bangkok interbank offered rate


Bank of Thailand


China Foreign Exchange Trade System


China interbank offered rate


Exchange Equalization Fund


Government Investment Certificate


London interbank offered rate


Monetary and Exchange Affairs Department


Malaysian Government Securities


nonbank financial institutions


People’s Bank of China


Provincial International Banking Facilities


special credit institutions


state commercial bank


state-owned enterprise


The following symbols have been used in this book:

  • … to indicate that data are not available;
  • — to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;
  • – between years or months (e.g., 1995–96 or January–June) to indicate the years or months covered, including the beginning and ending years or months; and
  • / between years (e.g., 1996/7) to indicate a fiscal (financial) year.

“Billion” means a thousand million.

Minor discrepancies between constituent figures and totals are due to rounding.

The term “country,” as used in this volume, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.

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