it is not necessary at all to set up hurdles between functional supervision, market entry and development of financial products. with economic development, whichever department is responsible for approval of establishment of institutions, business innovation shall not be impeded. there shall, not necessarily, be contradictions between functional supervision and business development. supervisory departments are adapting to the changing situation, transforming conception and strengthening coordination. besides, to maintain the stable and balanced development of the macro economy, the reports of the third plenary session of the 16th congress of the cpc have stated clearly that the pbc, the ministry of finance and the three supervisory commissions shall further strengthen coordination. the tendency has been reflected in relevant legislations. vi. the inherent advantages of foreign - funded banks have provided great potential for their development in china, and their development shall correspond with the demands of the macro financial situation. since reform and opening, more and more foreign - funded banks have entered the chinese market, playing significant roles in improvement of the chinese financial system and development of the financial market. in the course of economic transition, foreign - funded financial institutions have exhibited some advantages in corporate governance, risk control, risk management, credit culture, decision - making procedure, incentive structure and assets management, producing great potential for their development, and particularly for promoting development of the financial market and financial product innovation. development of foreign - funded banks shall take into consideration the needs of the chinese macro financial situation as well. in the course of economic transition, different industries and regions will have different stages and potential of development. foreign - funded banks might as well attach greater attention to development of some relatively weak financial markets, weak financial products or weak links and to the transformation of the economic structure, by supporting the development of northeastern old industrial bases and western region of china. they shall compete with the chinese counterparts on one hand and complement them on the other. it is hoped that foreign - funded financial institutions in china will do more to meet the needs of the chinese macro financial situation. they shall not only share the profits out of the rapid and stable growth of the chinese economy during the booming period but also weather possible busts and even crises for long - term operation and benefits. the above is also a topic for discussion and deliberation during the meetings of the bank for international settlements in february, 2004.

and remittance business. from april 2004, rmb bankcards issued by hong kong banks were accepted in the mainland. in november 2005, with approval of the state council, the pbc extended the scope of the rmb business position squaring and settlement arrangement for hong kong banks including raising the upper limits of some business and allowing hong kong residents to pay their consumption expenditures with checks in rmb denomination. after the national social security funds being allowed to invest in hong kong and other overseas markets, with approval of the state council, several policies were soon extended to facilitate different economic entities to invest in hong kong and other overseas market, including wealth management on behalf of clients, portfolio investment and insurance companies ’ overseas investments. in recent two years, bank of communications, china construction bank and bank of china were listed in the h share market of hong kong respectively. strengthened connection in commodity and service trade, investment and financial cooperation has brought many new demands for the payment system and fx market. the growth momentum of such demands is fairly evident. at the same time, both sides ’ attention on the establishment of financial infrastructure could ensure the safety and efficiency of financial services. for example, people had various concerns before the launch of personal rmb business, but it worked out smoothly since all relevant parties made sufficient preparations. the practice also proved that. these all indicated a promising trend. turning to the mainland, qfii was introduced into the mainland in recent years, and in this year, policies aimed at differentiating domestic investors investing in overseas financial products were issued. at the same time, efforts were made to develop the fx market by providing more risk - control tools and introduce market makers and otc transaction mode. therefore, the construction of financial infrastructure will face higher demands, such as how to prevent settlement risks and increase settlement efficiency to meet changing demands of the market. financial service is similar as goods trade in certain aspects. a country could import goods or attract foreign capitals to produce it in its homeland when it could not make it by itself. as to financial service, sometimes a country is not able to provide all services or make every service good. so financial service, including infrastructure service can also be provided by others. the mainland is now on the stage of improving the large - value payment system and establishing the retail payment system and disaster back - up system, therefore, hong kong is a good example for us to learn from its successful experiences in foreign exchange clearing and settlement. additionally, hong kong is developing