The Decision on Issues concerning improving the Socialist Market Economic System adopted by the 3rd plenum of the 16th CPC National congress further pointed out that “market-based interest rate reform should be steadily advanced to establish and improve the mechanism for determining interest rate based on market supply and demand.
The central bank shall use monetary instruments to influence market interest rate.” While moving in the general direction of market-based interest rate reform, we need to clarify some concepts. Some people think that the objective of market-based interest rate reform is to let all interest rates determined by the market. This perception is incorrect.