OREANDA-NEWS. December 24, 2013. ICBC disclosed at chinamoney.com the plan to issue interbank certificate of deposit (CD). According to the announcement, ICBC will issue the first interbank CD in National Interbank Market on Dec 12. This is also the first batch of interbank CD issued in China. The 1-month CD is issued on quotation basis with a size of RMB 3 billion.

From the year to date, the People's Bank of China (PBOC) has been boosting the establishment of market-oriented pricing mechanism and work related to the issuance and trading of interbank CDs. On Dec 8, PBOC announced the Interim Measures on Administration of Interbank Certificate of Deposit at its website as an effort to further standardize interbank CD issuance and trading and drive the growth of money market.

As a key member of market pricing mechanism and member of the interbank CD working group, ICBC has been highly committed to interest rate reform by leveraging the strengths as a large bank to boost the structuring of market pricing benchmark, support research into large-amount negotiable CD products and explore the issuance and trading of interbank CDs in interbank market.

Interbank certificate of deposit (CD) is a money market instrument issued by deposit-taking financial institutions in National Interbank Market against funds deposited at a bank. Investors and traders are members in national interbank lending market, fund management companies and fund products. Interbank CDs are electronically issued in national interbank market in public trading or private placement, with seven maturity options ranging from 1 month to 3 years. China Foreign Exchange Trading System & National Interbank Funding Center provides issuance, trading and information service for interbank CDs, while National Interbank Market Clearing House ("Shanghai Clearing House") provides registration, custody and settlement service for interbank CDs.

Industry insiders said, interbank CD is a key component of China's interest rate reform as it provides diversified money market trading instruments and standards interbank trading. It also has strong implications in providing alternatives for commercial banks to manage balance sheet and meet their demand for liquidity management.