People's Bank of China denies liberalising deposit rates

China’s central bank has vowed to adopt a more market-based system for setting interest rates but has proceeded cautiously.

China's central bank on Wednesday denied a report that it has kicked off a pilot programme to liberalise bank deposit rates.

The official China Daily reported on Tuesday that China has launched a pilot programme allowing some banks, including China Merchants Bank, to set deposit rates of their choosing.

"We haven't launched such a pilot programme," a spokeswoman at the People's Bank of China told Reuters.
China Merchants Bank has also issued a notice denying its involvement in such a reform scheme.

China currently sets a ceiling on deposit rates and a floor on lending rates, with a roughly 3 percentage point gap between them, a spread that is the source of a large chunk of bank revenues.

The one exception is that China allows banks to fix rates with clients for large deposits locked up for more than five years.

View the full story in Reuters.