Zhou Xiaochuan, Governor of the People's Bank of China, said in Beijing on the 10th that the central bank believes interest rate liberalization should be achievable within two years, but it also depends on external conditions such as the domestic and international economies.

Speaking at a press conference on the day of the sixth round of the China-US Strategic and Economic Dialogue, Zhou said that the timetable for interest rate liberalization is still being discussed in society and in financial circles. As the competent authority for interest rates, the central bank has its own timetable, which to a large extent depends on external conditions such as the domestic and international economies for implementation, but we believe it should be achievable within two years.

“I feel that China's top leaders all say that reform should have a sense of urgency and that we should seize the day, so we are preparing accordingly,” he said.

Zhou said that after interest rate liberalization is achieved, the central bank will still need to reflect the guiding role of the central bank's policy rates on the market through an effective transmission mechanism in the money market. At present, the central bank is preparing two to three main sets of management tools.

Turning to foreign exchange market reform, Zhou said the direction of reform is clear. Through reform, it is hoped that the exchange rate will achieve basic stability at a reasonable and balanced level, while allowing market supply and demand to determine the exchange rate more, and expanding the floating range and flexibility of the exchange rate. “As these goals are achieved, the central bank will significantly reduce intervention in the foreign exchange market when conditions are in place.”

Zhou said the overall international market is still not very calm, and problems frequently occur. With adjustments in the monetary policies of major countries, the international market will also experience some abnormal fluctuations and will also be affected by spillover effects. Therefore, China must maintain a cautious attitude.

“If short-term speculative forces emerge and market fluctuations become too large, we will take corresponding measures. If the market is relatively calm, the pace of our reform will be faster,” Zhou said.