China’s government aims to use all possible financial tools to increase the flexibility of the national currency. Recently, Beijing has announced the reforms which are supposed to encourage the yuan exchange rate flexibility and loosen state control over financial markets. This issue was the focal point in the speech of Zhou Xiaochuan, Governor of the People's Bank of China. He was speaking on the sidelines of annual high-level talks between China and the United States. According to the Chinese official, the reforms of the finance sector are already underway. So, China’s government has set about the step-by-step transition to interest rates adjustment on the market-based principles followed by liberalizing interest rates. This system is widely used by advanced economies. Besides, Zhou Xiaochuan stated that implementation of such market-based principles and their further use will require that Chinese banks should provide a certain margin conforming to the practice accepted worldwide. “After interest rates liberalization, the central bank will need an efficient mechanism to deliver the monetary policy to the financial market,” the Chinese policy maker spoke to journalists.
