sufficient capital, strict internal control, safe operation, good services and profitability. first, china will continue to conduct the share - holding reform of the wholly state - owned commercial banks, and deepen rural credit cooperatives reform, promote city commercial banks, city credit cooperatives and non - banking financial institutions to restructure and consolidate, encourage private funds to participate in the restructuring of urban credit cooperatives and city commercial banks, promote assets management companies market - oriented operation, restructure and consolidate securities companies and improve insurance companies reform so as to establish a multi - layer financial institutional system. second, efforts will be made to further improve corporate governance of the financial institutions and strengthen internal control system. we will promote financial institutions'ownership structure reform, establish incentives for the financial institutions to introduce strategic investors, board of directors, management and market participants and put in place risk management system and internal control system. third, financial innovation will be fostered. financial institutions should enhance their financial innovation and strengthen their pricing capability. commercial banks need to pay attention to developing their fee - based business ; securities companies need to develop seller's business ; insurance companies need to diversify investment channels and cultivate sustainable growth model. supervisory authorities need to provide policy to support financial innovation. ( 3 ) optimize financing structure and improve capital markets. efforts will be made to promote capital markets reform and stable development. in particular, historical burdens will be properly dissolved and institution building will be strengthened. bonds market will be further developed and pilot - program of credit securitization will be conducted, corporate bonds market will be developed, capital market structure will be improved and capital market instruments will be diversified. besides, we will improve interactions among the money market, capital market and insurance market to maintain broad stability of financial operation and financial market. ( 4 ) strengthen financial risks monitoring and early warning. risks of banks, securities firms and insurance companies as well as the cross - sector, cross - country and cross - region risks will be closely monitored. financial stability indicator system and early warning 4 / 5 system will be established to improve the monitoring and assessment of financial vulnerability and enhance monitoring and warning of financial risks. to strengthen the monitoring and prevention of systemic financial risks, the pbc will periodically issue financial stability review from 2005 to evaluate the financial system risk profile in china. ( 5 ) accelerate the establishment of financial safety networks. financial safety networks include prudential financial supervision, central bank's lender of last resorts function

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