Financial reform is coming to China. The country's leadership has made clear through recent pronouncements that it intends to liberalise the country's capital account and take other measures to increase the role of market forces in the financial system. That has set off a flurry of speculation about how quickly interest rates on bank deposits might be set free and the yuan made fully convertible. The answer, it seems, is not very quickly. On December 2nd the People's Bank of China (pboc), the country's central bank, issued a set of guidelines on how financial reform will proceed inside the new Shanghai Free Trade Zone (sftz). This 29 sq km enclave, created in September, has been trumpeted by Li Keqiang, the country's prime minister, as a driver of economic reform under his newish administration, albeit with scant detail until now.
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