bank in australia would help ensure that we are well positioned to participate in the next stages in the process of rmb internationalisation. ultimately, though, if china does follow the general path travelled by a number of other countries, these clearing banks are likely to become less significant. in other currencies, alternative arrangements exist for the clearing of cross - border flows, with financial institutions managing the liquidity and risk issues without access to an official clearing bank. if this eventually turns out to be the case for the chinese currency as well, then there is likely to be a reduced need for these official clearing banks. in the meantime, they are an important stepping stone on the path to a more internationally integrated chinese currency. finally, a fifth step that we hope to take soon is to obtain a quota for australian - based financial institutions to invest in mainland china under the renminbi qualified foreign institutional investors ( or rqfii ) scheme. following the granting of a rqfii quota to a specific jurisdiction, financial institutions operating within that jurisdiction can apply to the chinese authorities to obtain an individual investment quota. approved institutions can then invest their own quota in selected mainland chinese bonds and equities using rmb obtained in the offshore market. in this way, the rqfii scheme can be thought of as representing both a partial relaxation of controls on inward portfolio investment to mainland china and as a means of developing the offshore rmb market. 3 an rqfii quota would therefore represent an important next step in facilitating cross - border rmb - denominated investment transactions the rqfii scheme exists alongside two other schemes that allow approved institutions to invest foreign currency in selected mainland chinese securities : namely, the qualified foreign institutional investors ( or qfii ) scheme and a scheme that is commonly referred to as the china interbank bond market ( or cibm ) scheme. a number of australian - domiciled institutions have already received quotas under the qfii scheme, while the rba ’ s acquisition of rmb reserves was facilitated under the cibm scheme. the qfii and cibm programs differ in a number of respects, including : the types of mainland securities that can be purchased ; the types of investors that are eligible to apply ; and the mechanisms that are available to convert foreign currency into rmb. bis central bankers ’ speeches between our two economies. and, as australia has a relatively large and sophisticated private funds management sector, there is significant potential for growth in this area. so,

basic conditions for a stability - oriented monetary policy and an independent central bank in europe have been fulfilled. it is now up to those taking action to determine how this framework is filled out and implemented. there is certainly cause for optimism. the governors of the participating central banks and the members of the board are in accord that they must, from the beginning, operate as representatives of the euro area and its single currency and not as advocates of their nations. - viii all in all, the euro has had a relatively smooth and promising start. despite a trend to weakening on the foreign exchange market – due mainly to an increase in the spread of interest rates between europe and the us – it has increasingly gained acceptance on the financial markets, but also among the residents. however, the range of questions and risks presented above shows that european monetary union, which does not go hand in hand with an adequate political union, is an unparalleled experiment. for it to succeed, it will require a high degree of political discipline on the part of all participants. only the future can show whether giving up the deutsche mark for the euro was, in the long run, the right decision.