has been witnessed in fdi which has been gaining importance in our foreign economic relations. by now, the accumulated fdi flowed into china has reached over us $ 560 billion, a significant part of which was denominated in the currencies of the originating economies. the investment returns in the form of dividends will need to be exchanged into relevant foreign currency before being repatriated. therefore the factor of fdi has to be considered in the selection of the basket currencies. - current transfer items under the current account should also be considered though current transfers are not as important proportionally as other items in the current account, the currency structure of these transfers still needs to be considered in the determination of the weights assigned to the currencies in the basket. in sum, the reform of rmb exchange rate regime to allow rmb exchange rate float with reference to a basket of currencies is in line with the needs of diversifying foreign economic and trade relations as well as the development of the international economic and financial system. referring to a basket of currencies is not equal to pegging to such a basket. pegging means mechanically adjusting the exchange rate of rmb against the us dollar according to the exchange rate movements of the currencies in the basket in an attempt to keep the nominal effective exchange rate unchanged. quite differently, what we are having now is a managed floating exchange rate regime based on market demand and supply with reference to a basket of currencies. in comparison with an exchange rate regime of pegging to the us dollar solely, it can better reflect the competitiveness of rmb against major currencies, better absorb the impact generated by an unstable us dollar and moderate the fluctuations of rmb exchange rates at the multilateral level, safeguard the overall stability of china ’ s foreign economic and trade environment and consequently promote the basic equilibrium of balance of payments as well as the sustained, coordinated and healthy growth of the chinese economy. thank you very much.

money market rates, it is important that money markets are not fragmented. last time i addressed this workshop, which was in 2013, the backdrop provided by market conditions was quite different from what it is now. at that time, we observed elevated fragmentation in money markets. this related in part to sovereign risks which were prevalent at that time. since the sovereign debt crisis, the overall levels of fragmentation have receded sharply. the dispersion of risk - adjusted borrowing rates across countries is now relatively low. of course, rate - based indicators do not give direct evidence of the degree to which trading is taking place across borders. but an assessment of fragmentation based on trading quantities would be anyway rather elusive. the high level of aggregate excess liquidity has significantly curtailed the need for trading liquidity. the fact that money market rates, adjusted for credit risks, have largely converged speaks in 2 / 4 bis central bankers'speeches favour of a much reduced level of fragmentation and a more homogenous degree of access to liquidity across the euro area. this is also supported by the fact that the interest rates observed across countries are more correlated with aggregate excess liquidity levels rather than countryspecific levels. unsecured vs. secured segments second, we have observed a sustained shift of money market activity from the unsecured to the secured segment. activity in the unsecured segment has declined significantly over time, in the first place due to the heightened counterparty risk in the wake of the crisis. activity in the unsecured market has stabilised but remains subdued. this is linked to the high level of excess liquidity and reduced short - term funding needs for banks, as well as, to some extent, regulatory changes affecting banks ’ liquidity management. the ecb has never singled out one specific short - term interest rate as its operational target, but it is clear that the eonia, an unsecured money market rate, has provided an important point of reference to practitioners. the observed shift of activity from the unsecured to the secured market raises a number of important questions. for instance : do unsecured rates still have the same information content as before the crisis? is the arbitrage between secured and unsecured rates working efficiently? and, should the central bank focus more on steering secured rather than unsecured rates? in this regard it is also relevant that we have seen some divergence between secured and unsecured rates, which also relates to some extent to