financial market. in october 2005, the pbc approved the ifc and adb to issue at the inter - bank bond market rmb denominated bonds worth of 1. 13 billion and 1 billion yuan respectively. this is an important step forward in the inter - bank bond market. the pan asia fund and the asian bond fund were introduced to the inter - bank bond market as the first foreign institutional investor. in addition, the auto finance market was further opened. five foreign auto finance companies have started their business in china since 2004. further opening up of the financial sector, as a part of china ’ s wto accession commitment, is also a necessary ingredient in developing a socialist market economy in china. opening - up has not only brought challenges and pressures, but also fresh opportunities and more competitiveness. 2. financial reform was boosted by opening up opening up has helped deepen the reform of state owned financial institutions. since state council ’ s decision in 2003 on joint stock reform of commercial banks, piloting banks have moved very fast in their reform by improving corporate governance structure on the basis of international standard on public banks and in accordance with the regulatory requirements, drawing upon the advanced management expertise and technology from foreign banks, and conducting cooperation in risk management, internal control, financial management, human resources. financial indicators of these piloting banks have approached or reached the international standards. these banks have basically become modern joint stock commercial banks with adequate capital and strict internal control mechanism. the bank of communications and china construction bank have already been listed on the hong kong stock market. the opening - up of the chinese economy has promoted the management mechanism reform in the financial sector. one good example is the foreign exchange management system. in recent years, in line with the gradual opening - up of the financial sector, we have speeded up the foreign exchange management mechanism and improved management over the current account. compulsory foreign exchange surrender under the current account has been replaced with quota surrender. the coverage of exporting enterprises ’ automatic verification has been widened ; limit on foreign exchange payment by enterprises under the current account has been eased ; balance ceiling of enterprises ’ foreign exchange account has been raised and regional ceiling abolished. the foreign exchange management over individuals has been relaxed to allow individuals to pay and receive foreign exchange under the trade account. the convertibility of rmb under capital account has been promoted. management over external debt of chinese and foreign banks and the foreign exchange lending in their domestic operation has been strengthened and extended aggregate volume control over

on when - issued trading will be expedited, and guidance provided to intermediary agencies on technological upgrading of relevant systems so deepen the inter - bank bond market. new instruments of interest rate swap will be explored and certain institutions will be allowed to experiment in interest rate swap. fourthly, there has been more innovation in the product and transaction at the foreign exchange market banks have been allowed to conduct foreign exchange swap with their clients ; otc and market makes have been introduced to the market. on may 18, 2005, a market maker driven system of foreign currency to foreign currency spot transaction was launched, offering the market more products. more participants and a larger coverage were introduced in the piloting operation of forward foreign exchange surrender and purchase. we have moved faster to integrate with the international foreign exchange market. in march 2006, the china foreign exchange trade system and the chicago mercantile exchange reached an agreement for chinese financial institutions and investors to trade the exchange rate and interest rate products of the latter through the former. fifth, innovation in financial service philosophy and mode has been promoted. opening - up has introduced advanced expertise, new philosophy, new technology, and new philosophy from developed financial market. the domestic financial institutions have parted ways with their old operational method, adopted the philosophy of putting the customers first, innovated in service system and set up a service mechanism in line with the international practice in terms of financial product, business arrangement, procedure and management. quality of their service, operation and management has been elevated. domestic enterprises and households now enjoy financial services in investment, wealth management, payment and settlement, financial consulting, etc, and the convenience of payment through bank cards, and online payment. thanks to opening - up, the chinese financial sector has become stronger and the domestic financial market has progressed by leaps and bounds. the financial system has functioned better in resource allocation, promoting the rapid growth of financial sector and national economy. 4. further promote the opening - up and enhance the competitiveness of the financial sector china ’ s economic performance has caught global attention because its impact on the global economy has been on the increase. in the years to come, along with the progress of globalization and economic growth in china, we will definitely integrate more deeply in the world economy, and influence the world economy more significantly. it is a challenge for the financial industry to capital account ; the domestic financial market will be further opened ; financial legislation will be strengthened to build a market environment for fair competition ; a financial macro management system