approval of the state council, the pbc has formally written to the fatf in april this year and applied for a membership in the fatf. meanwhile, china has contacted the preparatory committee of the euro - asia group on aml and combating terrorist financing ( eag ) through various channels. the pbc and the ministry of public security participated in the preparatory meeting of the eag on aml held in russia in june 2004. china will make efforts to become the initiating member of “ the eag ”. making full use of international resources in beefing up in staff training constitutes an important part of the international aml cooperation of china. in recent years, the pbc, the ministry of public security and the safe, in collaboration with the international organizations like the un, the world bank, the imf and the fatf, have held a series of seminars and training sessions. in the first half of 2004, the pbc, jointly with related agencies and international institutions, organized four aml seminars and training sessions, providing technical support for aml work in china. iv. prospects for aml in china generally speaking, the situation of aml is good. the relevant aml policies and measures have taken effect. the coordination and working mechanisms at various levels have been brought onto the right track. and with the deepening of aml work, the effects will unfold further. as aml is an important while arduous task that influences the overall society, all members of the joint conference shall collaborate with concerted efforts in doing well the following work. 1. continuing to reinforce the coordinating mechanism of aml efforts shall be made to continue to carry out directives by the central committee of the cpc and the state council on combating corruption, advocating honest and clean government and fighting economic crimes. in order to effectively fend off and crack down on crimes of money laundering, to safeguard the national economic and financial security and normal economic order, the ministerial joint conference on aml will, under the leadership of the state council, be responsible for guiding the national aml work, drawing up the important national aml principles and policies and the policies and measures for international aml cooperation, and coordinating all departments and mobilizing resources of the whole society to carry out aml work. as the leading ministry of the joint conference, the pbc will commit to strengthening research on aml policies and measures, improving management on aml, reinforcing supervision on aml of financial

european regulation, supervisors may require the banks to use the international financial reporting standards for supervisory reporting. we have chosen not to exercise this option. it would have imposed a disproportionate burden on those banks that draw up their balance sheets according to national standards. banks may therefore continue to use national standards for their supervisory reporting. accordingly, the reporting requirements are quite precisely tailored to, among other things, the size of the institutions. in anticipation of future reporting requirements, we asked the national supervisors last year, for the first time ever, to provide us with supervisory data on all small and medium - sized banks. they were asked to submit 37 separate data points, including the balance sheet total, the level of customer deposits or the trading book portfolio – so nothing complex at all. by contrast, the banks that are directly supervised by the ecb are asked to give more than 8, 000 data points – and these have to be submitted not annually but quarterly. and one last example : the supervisory fees are also based on the principle of proportionality, rightly taking into account the significance, the size and riskiness of the respective institution. of this year ’ s fees, around 88 % are allotted to the 129 institutions directly supervised by the ecb, 12 % to 3, 200 smaller banks. conclusion ladies and gentlemen, harmonising banking regulation and supervision in europe plays a key role in ensuring the stability of the banking sector and in providing the basis for prosperity and growth in the euro area. with regard to the banking sector, we have in the last year - and - a - half come a long way, but there is still much to do. in view of the increasing harmonisation of regulation and supervision their proportionality is a recurring issue, not least because the complexity of regulation has increased. again, it ’ s always being said that smaller banks above all are bearing a disproportionate burden ; and again, a reduction of these burdens is always being called for. this discussion is important, but it must be conducted in a discerning way. first, regulation and supervision already follow the principle of proportionality – i have given some examples. second, the complexity of regulation and supervision is not least due to the increasing complexity of the banking business. and third, the principle of proportionality must not be used as a pretext for generally weakening regulation and supervision. the basis of the discussion must always be the cost - effectiveness of regulation and supervision – proportionality must