Amounts below US$3 million are accepted for the interest rate, in mainly the US dollar, British pound, euro, Canadian dollar, Swiss franc, Japanese yen, and Hong Kong dollar, Jiang said.

"The significant move aims to prepare the banking industry for more challenges after China enters the World Trade Organization and promote the industry to open wider to the outside world," said Jiang, who is also chairman of the China Association of Banks (CAOB).

New deposit interest rates for the US dollar, Japanese yen, euro, Canadian dollar and Swiss Franc will be higher than previous interest rates, while those for the Hong Kong dollar and British pound will be slightly lower, he said.

Take one-year deposit for example, the interest rate for US dollar rose from 5 percent to 5.5 percent; euro up from 3 percent to 3.6875; Japanese yen up from 0.0215 to 0.1465; while the deposit interest rate for Hong Kong dollar down from 5.5 percent to 5.3125.

Deposit interest rates for major hard currencies will be designated by the China Association of Banks at a "unified" rate to be carried out by all financial institutions.

However, the deposit interest rate for a hard currency equivalent to three million US dollars or over will be decided through negotiations between financial institutions and their clients.

Previously, the deposit interest rate was designated by the Bank of China. After the reform, commercial banks are now able to set their own deposit interest rates according to the international market and operation costs.

The CAOB has mapped out a series of policies and measures to keep up with movements on the international interest rate market and adapt the movements to the Chinese market, said Zheng Weiping, CAOB's vice-chairman.

(China Daily)