ABSTRACT
The essence of market-based interest rate reform is to transfer the capital pricing power from the government to the market, and its core lies in deregulating interest rates to expand market players’ pricing power and optimizing the allocation of resources. If developing and transitional economies want to successfully achieve the goals of reform, they need not only allow market players the pricing power but also foster many conditions for liberalization and establish a sound market-oriented interest rate formation mechanism. This will enable market players to form reasonable price equilibrium through competition.
