【正确答案】Financial liberalization refers to measures directed at diluting or dismantling regulator，controlling over the institutional structures, instruments and activities of agents in different segments of the financial sector. 　　These measures can relate to internal or external regulations (Chandrasekhar, 2004). Internal financial liberalization typically includes some or all of the following measures, in varying degrees; 　　●The reduction or removal of controls on the interest rates or rates of return charged by financial agents. Of course, the central bank continues to influence or administer that rate structure through adjustments of its discount rate and through its own open market operations. But deregulation typically removes interest rate ceilings and encourages competition between similarly placed financial firms aimed at attracting depositors on the one hand and enticing potential borrowers to take on debt on the other. As a result, price competition squeezes spreads and forces financial firms (including banks) to depend on volumes to ensure returns. 　　●The withdrawal of the state from the activity of financial intermediation with the conversion of the " development banks" into regular banks and the privatization of the publicly owned banking system, on the grounds that their presence is not conducive to the dominance of market signals in the 　　allocation of capital. This is usually accompanied by the decline of directed credit and the removal of requirements for special credit allocations to priority sectors, whether they are government, small-scale producers, agriculture or other sectors seen as priorities for strategic or developmental reasons. 　　The easing of conditions for the participation of both firms and investors in the stock market by diluting or doing away with listing conditions, by providing freedom in pricing of new issues, by permitting greater freedoms to intermediaries, such as brokers, and by relaxing conditions with regard to borrowing against shares and investing borrowed funds in the market. 　　●The reduction in controls over the investments that can be undertaken by financial agents and, specifically, the breaking down the "Chinese wall" between banking and non-banking activities. Most regulated financial systems sought to keep separate the different segments of the financial sector such as banking, merchant banking, the mutual fund business and insurance. Agents in one segment were not permitted to invest in another for fear of conflicts of interest that could affect business practices adversely. The removal of the regulatory walls separating these sectors leads to the emergence of "universal banks" or financial supermarkets. This increases the inter-linkages between pyramiding financial structures. 　　●The expansion of the sources from and instruments through which firms or financial agents can access funds. This leads to the proliferation of instruments such as commercial paper and certificates of deposit issued in the domestic market and allows for offshore secondary market products such as ADRs (American Depository Receipts—the floating of primary issues in the United States market by firms not based in the United States) or GDRs (Global Depository Receipts). 　　The liberalization of the rules governing the kinds of financial instruments that can be issued and acquired in the system. This transforms the traditional role of the banking system's being the principal intermediary bearing risks in the system. Conventionally, banks accepted relatively small individual liabilities of short maturities that were highly liquid and involved lower income and capital risk and made large, relatively illiquid and risky investments of longer maturities. The protection afforded to the banking system and the strong regulatory constraints thereon were meant to protect its viability given the role it played. With liberalization, the focus shifts to that of generating financial assets that transfer risks to the portfolio of institutions willing to hold them. 　　External financial liberalization typically involves changes in the exchange control regime. Typically, full convertibility for current account transactions accompanying trade liberalization have been either prior or simultaneous reforms, which are then complemented with varying degrees of convertibility on the capital account. Capital-account liberalization measures broadly 　　cover the following, in increasing degree of intensity, but with a wide variety of patterns of implementation: