zhou xiaochuan : development of china ’ s inter - bank market address by dr zhou xiaochuan, governor of the people ’ s bank of china, at the opening ceremony of the shanghai clearing house, shanghai, 28 november 2009. * * * mayor han zheng, distinguished guests, dear colleagues, ladies and gentlemen, good morning. today, we gather here to celebrate the establishment of the shanghai clearing house. this is a milestone in the development of china ’ s inter - bank market. on behalf of the people ’ s bank of china ( pbc ), i ’ d like to extend warm congratulations on the founding of the shanghai clearing house. i also thank the shanghai government and people for your gracious support. as a key component of the financial market system, the inter - bank market is playing an increasingly important role in macroeconomic management, fund allocation, pricing and risk management. the people ’ s bank of china is committed to developing the inter - bank market. over the past few years, efforts have been made to enhance financial innovation, improve the market - based mechanism, and expand institutional investors on the market. the inter - bank market has grown in both depth and width. in 2008, the turnover in the inter - bank borrowing market and the inter - bank bond market totaled 114 trillion yuan, an increase of 560 percent from that in 2003. nominal turnover of interest rate derivatives recorded 924. 32 billion yuan, 6. 56 times that in 2006, while nominal turnover of exchange rate derivatives registered us $ 917. 9 billion, 7. 07 times that in 2006. transactions on the inter - bank foreign exchange market also multiplied. the rapidly developing inter - bank market needs more efficient and secure clearing services. in june, the pbc launched the net value clearing service for spot over - the - counter ( otc ) transactions in the inter - bank foreign exchange market, which effectively reduced bilateral credit sizes and lowered clearing costs. the centralized clearing of otc transactions is an international issue. centralized clearing systems for over - the - counter spot trading and derivatives transactions of foreign exchange and interest rate products have been set up in advanced countries and in emerging market countries such as brazil and india. more importantly, following the financial crisis, countries have reached consensus on controlling financial transactions risks. countries agreed that lowering counterparty risk and ensuring effective supervision and regulation are the key to ensure secure and orderly development of the otc derivatives market, which can be best achieved through centralized clearing. in april,

wu xiaolin : china ’ s monetary and interest rate policy in year 2004 speech by miss wu xiaolin, deputy governor of the people ’ s bank of china, at the forum of financial opening and commercial bank reform of china, beijing, 17 april 2004. * * * the 3rd plenum of the 16th cpc national congress calls for deepening financial reform through pushing forward financial institutions reform and improving financial supervisory and regulatory regime. commercial bank reform, one important component of financial reform, is inseparable from the improvement of financial regulatory regime, which will not only lay the foundation for commercial bank reform, but also intensify the requirements for the operation and management of commercial banks. given current economic and financial situation, central bank ’ s monetary policy stance in year 2004 is to rein in excessive money and credit growth, avoid excessive volatility of interest rates and accelerate interest rate liberalization. next, i would like to focus on china ’ s monetary and interest rate policy in year 2004. i. monetary policy targets in 2004 we expect to keep the m2 and m1 growth rates at around 17 %, new rmb lending around rmb 2. 6 trillion yuan, and cpi around 3 %. the ultimate objective of our monetary policy is to maintain balanced economic growth. large population and comparatively insufficient resources in china pose constraints on economic growth. therefore, the economy should be developed in a pragmatic, coordinated and balanced way. according to the 7 % growth rate target for 2004 set by the central committee, and considering that money supply growth and new lending in 2004 should be lower than those in previous year due to the time lag of excessive credit growth in 2003, we decided on the aforementioned monetary policy targets. with appropriate macroeconomic adjustment and regulation, the cpi in year 2004 is expected to be kept at around 3 %. to be more specific, hangover effect may contribute 2. 2 pp to cpi, new inflation factors and price adjustment policies contribute 1 pp. combined with other non - quantifiable upward price pressure, the cpi growth rate could maintain at around 3 % if macroeconomic adjustment measures gradually take effect. given that china ’ s economy, in recent years, has been in the process of transition and integration into the world economy, the correlations among economic variables kept changing ; hence the selection of intermediate monetary policy targets provoked debate in academia. before any clear conclusion is reached, we have to make the intermediate targets a synthetic target, focusing on m2 and credit scale while considering money