A letter to the editor in the Wall Street Journal - Essay Example

The Editor I would like to comment on the article by Sheng Hong in The Wall Street Journal of 05 September en d ‘China brings back bond futures.’ This is a positive step in as far as the financial market in China is concerned. First and foremost, this will significantly help this great country to modernize its economy. Having adopted a free market economy, China is set to shape its economy to meet world standards which can positively contribute to its growth. The reopening of the bond futures markets will also play a significant role in easing state control over interest rates.

In pure economic terms, the interest rates should be determined by the market forces prevailing at a particular moment. The government’s grip and control of the economy negatively impacts on its normal functioning. The main advantage of bond futures is that they offer long term investors an instrument to hedge against price swings. This will help protect them against unprecedented changes in the financial markets which can result in huge loses. In any economy, I strongly believe that investors play a significant role since they help it to grow as well as to stabilize it.

Future bonds also help businesses to access funding in order to run their own enterprises. This also contributes to the growth of the economy through remittances of taxes which will be channelled towards the nation’s fiscus. Overall, I think the move by the Chinese government to bring back bond futures is a positive step towards liberalising the economy which can improve its overall performance. This move will also stabilize the interest rates. Therefore, I would like to commend the Chinese government for this noble decision since it is helpful to the overall performance of the economy as a whole.

Yours SincerelySign Works citedSheng Hong. ‘China Brings Back Bond Futures’ The Wall Street Journal. . 05 Sep. 13. Web. O5 September 2013.