This book explores the relationship between interest rate liberalization and the reform of China's financial system. It covers many important topics about China's financial system including the role of deposit and lending rates, yields to investment, the relationship between investment and real interest rates, the impact of interest rate liberalization on resident saving, mechanism for RMB exchange rate determination, and policies necessary for interest liberalization. The book also discusses key impediments, path choice, and policy recommendations for China's interest rate liberalization.