No scrapping of China’s bank deposit rate ceiling before 2015

Emplacing a deposit insurance system takes priority.

The China Securities Journal said China said the scrapping of a ceiling on deposit rates would be the final step in China's interest rate liberalization but this is unlikely to happen either this year or in 2014.

The journal said a sudden lifting of the deposit rate ceiling would likely result in rate wars among banks to entice depositors, threatening the survival of small lenders.

It believes the launch of a deposit insurance system should be requisite for abandoning the deposit rate ceiling.

The People’s Bank of China, the central bank, said it planned to free up deposit rates eventually, but now was not the right time. It earlier removed controls on bank lending rates last week that could help lower financial costs for companies.