Road map for financial reform

Editor's note: The author, the governor of the People's Bank of China, outlined the government's proposed financial reform plans in his recent article in People's Daily. The following is the second part of an excerpted translation. The first part was carried by China Daily on Dec 11.

Making steady efforts to push forward marketized reforms of the country's exchange rate and interest rate mechanisms

To give the market a decisive role in the distribution of resources calls for the establishment of a market-dominated pricing mechanism and its improvement, so that the market can enjoy a free hand in deciding prices while undue interventions from the government can be reduced. As an important part of the factor market, interest and exchange rates are a determinant in the distribution of domestic resources, steadily pushing forward market-based interest and exchange rate reform will help China optimize and raise the efficiency of its distribution of funds, further strengthen the market's decisive role in the distribution of resources and accelerate the transformation of the country's economic development model and structural adjustments.