China's Interest Rate Marketization and Interest Rate Transmission Mechanism: Historical Experience and Enlightenment
Xiuli Cui, PhD

Abstract
Interest rate marketization and interest rate transmission mechanism have complementary internal relations. Analysis of interest rate marketization reform process helps to understand the evolution logic of interest rate transmission mechanism, and interest rate transmission mechanism construction is related to China's monetary policy operation framework transformation.At present, the construction of interest rate transmission mechanism of China's monetary policy still needs to be further promoted. The benchmark interest rate of deposits has not been abolished, the ability of financial institutions to price interest rates is not strong, and the market benchmark interest rate system is imperfect, which restricts the smooth flow of interest rate transmission mechanism.This paper summarizes the evolution and characteristics of interest rate transmission mechanism in different stages of China's interest rate marketization reform from the two scenarios of interest rate dual-track system and interest rate integration, and forms and evolves the money market interest rate to bond market interest rate and deposit-loan interest rate transmission mechanism. The obstacles are analyzed, revealing the logic law implied by the interest rate marketization reform and the evolution of the interest rate transmission mechanism, providing a reference for improving the interest rate transmission mechanism in the future. At the same time, combining with the current reality of China's interest rate transmission mechanism, this paper proposes to strengthen and give play to the role of interest rates transmission mechanism.This paper believes that interest rate marketization is the source of interest rate transmission mechanism. China's interest rate marketization reform has achieved great success at the institutional level, but still exists in the financial institutions' own pricing power, the construction of SME financing channels, and the construction of market benchmark interest rate system. Obstructing the smooth flow of the interest rate transmission mechanism, it should be regarded as a key segment of the interest rate transmission mechanism in the future.

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