China vows to further liberalize interest rates

China will steadily push forward market-oriented reform in its interest rates and exchange rates mechanisms this year, a central bank report said on Friday.

The central bank, or the People's Bank of China, has pledged to further optimize the credit structure to allow the financial sector to better serve the real economy, according to the report on China's financial stability.

It calls for market-led steps to carry out innovation to make the country's financial sector more diversified and efficient, while stepping up regulatory controls to guard against possible risks.

China will make solid moves to build a deposit insurance system to prevent systematic and regional financial risks, according to the report.

The central bank sets benchmark interest rates for the market and only allows them to float within the floor of lending rates and the ceiling of deposit rates. Last year, the central bank expanded the range twice.

Currently, banks can set deposit rates as high as 110 percent of the benchmark and offer loans at a 30 percent discount.

In a separate document drafted by the National Development and Reform Commission, the planner said China should gradually widen the floating band of interest rates and steadily push forward reforms to make the yuan convertible under the capital account, without naming a specific timeframe.