Market may get more input on rates

China is exploring the creation of a mechanism that would use a band to guide the country's interest rates, an approach aimed at giving the market a greater say in the financial system, a senior monetary official said on Sunday.

Yi Gang, vice-governor of the People's Bank of China, said at a news conference that the mechanism being looked at is an interest rate corridor that would be formed through the central bank's deposit and lending facilities to commercial banks.

"China needs to improve the interest rate system to enhance the guidance of the market rates and the effectiveness of monetary policy," said Yi, who is also a member of the Chinese People's Political Consultative Conference National Committee. He made the remarks on the sidelines of the ongoing meetings of the country's political advisers and lawmakers.