China to offer electronic Savings Bonds
Wednesday, June 21st, 2006
Categorized as: Yesterday's News (old post archive)
According to articles yesterday in China Daily and Shanghai Daily, the central bank in China announced this week that it's preparing to offer Chinese citizens electronic Savings Bonds in addition to the paper bonds it already offers.
China wants to control its rapid economic growth by reducing the money supply. Savings Bonds help because they will move some of China's huge household deposits out of banks, which will limit the lending capacity of the banks.
The bonds will have an unannouced fixed interest rates and will be exempt from the normal 20% tax on interest earnings, the announcement says.
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Update: China Daily reports the new Chinese Savings Bonds will be three-year bonds paying 3.14%.
The going rate on three-year bank deposits is 3.24%, but the Savings Bonds are free of a 20% interest-earnings tax.