The approaching demise of the discredited London Interbank Offered Rate (Libor) is prompting major central banks globally to create new benchmarks. The People’s Bank of China wants to elevate another key rate in the interbank market — the Depository-Institutions Repo Rate (DR) — to benchmark status, partly to align itself with the shift in international practices. […] It’s used in the interbank market, where financial institutions sell yuan between themselves, and is based on actual trades. […] The PBOC described it as a “barometer” for liquidity in the banking system last month, and said it will work to “innovate” and “broaden” the use of DR in financial products and make it a benchmark for monetary policy and financial market pricing. […] China is in the midst of an effort to improve its overall interest-rate system while also handling the transition from Libor for Chinese banks that are exposed to foreign currencies.
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