The People’s Bank of China (PBOC) is liberalizing interest rates on smaller foreign-currency deposits across Shanghai in the first pilot free trade zone (FTZ) reform to be applied outside the zone. Interest rate ceilings on foreign-currency deposits of less than USD3 million are removed following a 4-month trial in the zone. It will apply to companies initially but could be extended to individuals later. The rate ceiling for foreign-currency deposits was 1.5% for current accounts. China liberalized lending and deposit rates, from 2000, for accounts holding more than USD3 million. The city currently has more than USD20 billion in smaller foreign-currency deposits. Foreign-currency deposits amounted to USD76.7 billion in Shanghai at the end of May, a seventh of the national total. Outstanding foreign-currency lending was USD79.8 billion, a 10th of the national total. Liu Ligang, Chief Economist at Australia & New Zealand Banking Group for China, described the move as “an important experiment for China’s interest rate liberalization.” Seven banks have been granted approval to offer free trade accounts, which in theory allow holders to move local and foreign exchange funds in and out of China without being subject to the strict capital controls that apply outside the free trade zone. Foreign-currency deposits totaled USD566 billion in May, representing about 3% of total deposits in China.