The People's Bank of China (PBOC) is finalising a provisional regulation to govern operations of the country's first national interbank money market, which will go public next week. Banking sources said the central bank would release the regulation in the next few weeks to provide a legal framework for a market expected to expand rapidly. The market is designed to unify interbank lending rates through demand and supply, using a national electronic system. It was launched on a trial basis early in January. 'The draft regulation was passed around for comments by participants recently and should be ready this month or next month,' a Chinese banker said. When the market goes public, the 54 primary dealers - headquarters of 19 banks and 35 fund-raising centres - will be able to have access to real-time interest rates and trading volume. Short-term money may be raised for seven, 20, 30, 60, 90 or 120 days. Bank branches take part in the market through their headquarters, unless they are empowered to participate directly through the fund-raising centres. Non-bank financial institutions, such as trust and investment companies, and insurance firms may borrow or lend in the secondary market through the centres. Analysts said that while the market was rudimentary in its scope, it succeeded in unifying interest rates for short-term debt requirements on a national level. Previously, the regional spread between lending rates was marked, giving rise to an inefficient matching of capital resources. 'On the whole, the market has been able to set interest rates based on actual supply and demand for short-term capital,' Tang Xu , director of the PBOC graduate school, said. Because the central bank does not set a lending quota, the rates are essentially market-based. The rates, known as China interbank bank offered rate (Chibor), are published daily, but transaction volume is not. Mr Tang said allowing the Chibor rates to be set by the market was the start of China's drive to liberalise all interest rates in the long term. Savings deposit and lending rates by banks are set by the central bank, under the guidance of State Council. 'But for the interbank market to reflect money supply, Chibor will eventually have to become the benchmark for other interest rates,' the banker said. Monthly interest rates have ranged from a low of 0.986 per cent for a seven-day loan, to a high of 1.144 for a 120-day loan. 'The rates are now as they should be - lower costs for loans of shorter periods and higher rates for longer periods,' Mr Tang said.