China steps up market reforms with new prime lending rate

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#1
The first quote is 5.71%, slightly lower than benchmark rate of PBOC, which is 6% now...

China steps up market reforms with new prime lending rate

(Reuters) - China launched a new benchmark lending rate on Friday in another step towards letting markets set the cost of funds and reducing distortions that have led to excessive investment and overcapacity now dogging the world's second-largest economy.

The "loan prime rate," will guide commercial bankers in setting interest rates when lending to their best customers, the country's central bank said.

China has been gradually moving away from rate controls in favour of a market-driven system and in July abolished all controls on bank lending rates.
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The new rate, which only has a one-year tenor, was set by nine commercial banks including China's four biggest banks and was quoted for the first time on Friday at 5.71 percent.
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http://uk.reuters.com/article/2013/10/25...9B20131025
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#2
a further step to market-based interest rate instead of PBOC fixed.
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#3
will this usher in a new age of chinese credit balloons?

Interesting to see that the new "market" rate is lower than the previous official government controlled on.
Virtual currencies are worth virtually nothing.
http://thebluefund.blogspot.com
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#4
If it is cheaper to borrow from each other than to borrow from the central bank, what does that say about money supply in China? Anyone can interpret this?
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