China's central bank expanded banks' freedom to set foreign-currency deposit rates to all of Shanghai from the city's free-trade zone, a step toward easing controls across the nation.

The People's Bank of China (PBOC) will remove the cap on foreign-currency deposit rates in Shanghai effective tomorrow for what it described as small accounts, according to a statement distributed at a briefing in the city today. The trial will start with institutional accounts, and individual accounts will be added later based on “market conditions.”

The PBOC removed the cap on foreign-currency interest rates on March 1 for deposits of less than $3 million inside the trade zone, part of plans to give markets a greater role in the world's second-biggest economy. The central bank, which removed the floor on most lending rates in July 2013, will liberalize state-set deposit rates within one to two years, Governor Zhou Xiaochuan said in March.