##ncies. of course, if the proceeds are to be used on the mainland, the moving of funds into mainland china will have to meet the requirements there. by the same token, banks can now also offer rmb financing to their clients, including enterprises which conduct direct investments under the pilot scheme for the settlement of odi in rmb introduced in january this year. as the pool of offshore rmb funds in hong kong continues to grow, there will be huge opportunities for financial institutions to take part in rmb financing as well as in the origination, distribution, investment and trading of rmb bonds. the second dimension is rmb trade settlement. the rmb trade settlement pilot scheme was introduced in july 2009. the initial scope of the scheme was rather limited. but in less than a year, the pilot scheme was expanded to cover enterprises in 20 provinces and cities on the mainland and their trade transactions with any parts of the world can now be settled in rmb. the expanded scope has led to a rapid growth in the transaction volume of rmb trade settlement in hong kong, which was increased from a monthly average of 4. 5 billion yuan in the first half of 2010, to more than 87 billion yuan in the fourth quarter, representing an almost twenty - fold increase during the period. to date, hong kong accounts for about 75 % of mainland ’ s rmb trade settlement. this clearly demonstrates the strong preference of market players for making use of hong kong ’ s platform for rmb trade settlement. the highly efficient and reliable rmb real time gross settlement ( rtgs ) system in hong kong has played a significant role here. we are the first and so far the only place outside mainland china that has developed a full - fledged rmb rtgs system, enabling us to handle the settlement of cross - border trade between the mainland and other economies in a safe and efficient manner. china is one of the biggest trading nations in the world. the potential for further increases in rmb trade settlement is considerable given that the current volume only accounts for a small fraction of total trade between china and the rest of the world. rmb trade settlement proceeds will represent an important and sustainable source of growth in offshore rmb funds in hong kong. the third dimension is rmb wealth management business. the rmb wealth management business in hong kong took off last year after the rmb clearing agreement was revised in july 2010. the rmb clearing agreement lays down the framework for rmb business in hong kong. i will

been the largest recipient of odi flows from the mainland. at present, about 60 % of odi from the mainland has gone to hong kong or via hong kong to other places. the significant share of hong kong in mainland ’ s fdi and odi underscores the unique role of hong kong as a gateway for foreign enterprises to access the mainland market, while at the same time being a springboard for mainland institutions to gain exposure to international markets. with respect to portfolio investment flows, market attention has been focusing on portfolio flows from advanced economies towards mainland china. in my view, portfolio flows in the opposite direction – i. e. portfolio outflows from mainland china – will also present huge bis central bankers ’ speeches opportunities to the asset management industry, especially given the fact that the mainland economy is the single largest provider of savings in the world. currently, outward portfolio investment ( opi ) from the mainland is only around 5 % of its gdp, still far below 57 % for east asia, 42 % for the us and over 100 % for the uk. our inhouse research findings show that an economy ’ s portfolio investment outflows as a percentage of gdp tend to grow along with the level of economic development measured by per capita gdp. so, given the huge potential outward portfolio investments from mainland china, how will they be allocated across different financial markets? our researchers have studied this particular subject in depth and found that the home bias is still very much there, i. e. the closer the potential investment destination to mainland china, the more opis it will receive from mainland china. as such, hong kong is likely to be one of the key destinations of mainland ’ s opis and the amount of those opis hong kong will receive will increase as china ’ s gdp grows. apart from being the final destination for these investments, hong kong can also act as an ideal launch platform for these investment flows to reach other major global markets. since the introduction of the qdii scheme, about us $ 67 billion worth of investment quotas have been granted up to september 2010. it is likely that a significant portion of these moneys is managed out of hong kong. in fact, over 40 mainland companies providing fund management, securities and futures, insurance, and other services have already established a presence in hong kong to manage the funds flowing out of the mainland and engage in fund advisory businesses. we expect the process of financial liberalisation in mainland china to be a gradual and controllable one,