China plans daily benchmark rate from 2007

China's central bank plans to issue a benchmark interest daily starting in 2007, state media reported. The move is part of an effort to give market forces more play, according to Wu Xiaoling, deputy governor of the People's Bank of China. Wu said the benchmark interest rate will be based on quotations for various inter-bank lending and borrowing rates offered daily by 16 commercial banks with good credit. The central bank controls deposit and loan rates due to poor regulation in financial markets. This control, said Wu, helps stabilize operations but it has also cut the connection between monetary markets and interest rates. Experiments with the inter-bank offered rate quotation started in Shanghai in October.