Why China’s starting to shake up its interest rates

Market reforms: A man rides a bicycle past the PBoC. Eventually, the PBoC wants to influence the economy and financial markets via the price of its short-term loans in the open market - an approach similar to other central banks.— Bloomberg

BEIJING: The People’s Bank of China (PBoC) is liberalising its interest rate system in another milestone in the landmark reforms started four decades ago to boost the role of markets in the economy. The overhaul might also help lower the cost of borrowing for companies and households in the short term, as the economy grapples with its own downward forces and the US-China trade war.

1. How did it work before?