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Chinese banks to issue certificates of deposit

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BEIJING, June 2 (Xinhua) -- The central bank issued a provisional regulation on Tuesday that allows financial institutions to issue certificates of deposit, giving banks more freedom over pricing interest rates.

A certificate of deposit is a time deposit that entitles the holder to receive interest, usually at a higher rate than ordinary deposits, thus, are more appealing to savers.

From Tuesday, individual investors can buy certificates of deposit worth at least 300,000 yuan (about 48,860 U.S. dollars) and institutional investors at least 10 million yuan.

Interest on the certificates will be mainly determined by the market. Banks and investors can set a fixed, or a floating rate, using the Shanghai Interbank Offered Rate (Shibor) as a benchmark.

"Certificates of deposit will give financial institutions more pricing autonomy, thus, pushing the liberalization of interest rates," according to the central bank.

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