The People's Bank of China denied that it has begun to liberalize interest rates under a pilot program, after China Daily reported yesterday that China has allowed some banks and selected lenders to set interest rates freely at least two months ago.

China Merchants Bank, which was said to be a pilot bank, said it has never received any notice on a short-term deposit rate liberalization trial.

China has set a ceiling on deposit rates and a bottom for lending rates to bring the lending system under control. Zhou Xiaochuan, head of the central bank, said in December that the People's Bank of China will allow banks that have strict controls on finance to set their own rates.

The central bank has been moving toward a more market-conscious interest rate system.

China's business press carried the story above on Wednesday. China.org.cn has not checked the stories and does not vouch for their accuracy.