China scraps benchmark lending rate to liberalise financial system

The LPR, revamped to become the benchmark for new loans this year, is based on the interest rate for one-year loans

China’s central bank ordered lenders to adopt a new loan-pricing regime for all credit from next year, marking an end to the previous benchmark and another a step toward liberalizing the financial system.
 

Financial institutions should stop using the old lending rate as the pricing reference for all credit from January, while gradually converting existing loans to a new base -- the loan prime rate -- from March to August, the People’s Bank of China said Saturday. The one-year lending rate had provided the previous anchor for loans across the economy.
 

The move could lower costs for some of the