China's central bank, the People's Bank of China (PBOC), announced plans to widen the floating loan interest rate for all commercial banks to 1.7 times the benchmark rate beginning January 1.
The PBOC also reduced the interest rate paid on deposits held on behalf of commercial banks above the official reserve requirement from 1.98% to 1.62% in mid-December.
The liberalization would allow banks to better price credit risk for their business loans, the PBOC said.