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

The People's Bank of China (PBOC) will remove the cap onforeign-currency deposit rates in Shanghai effective tomorrow forwhat it described as small accounts, according to a statementdistributed at a briefing in the city today. The trial will startwith institutional accounts, and individual accounts will be addedlater based on “market conditions.”

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

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