to the world economic development. therefore, we should be extremely cautious. recently, some foreign friends have showed their concerns about the potential overheating of the chinese economy due to the expansion of money supply as a result of the rapid increase of foreign exchange. i would like to reassure these friends by recalling our experience during the asian financial crisis. at that time, china successfully maintained steady economic growth while keeping the rmb exchange rate basically stable. today, we are confident that we will be able to prevent great ups and downs in the national economy while keeping the external value of our currency basically stable. china ’ s exchange rate reform is still underway. in light of the china ’ s current stage of economic development, performance of the economy and developments in international payments, we will further examine and improve the mechanism for determining the rmb exchange rate and keep the rmb exchange rate basically stable at an adaptive and equilibrium level. in pursuing the exchange rate reform, due consideration will be given to china ’ s current economic and social development, the government ’ s macroeconomic management capability and the progress achieved in various economic reforms and financial reforms including the improvement of financial supervision capacity. the reform of the rmb exchange rate cannot be carried out in isolation. instead, it should be pursued in tandem with other reforms. several preconditions need to be met before the rmb exchange rate can be freely floated. first, trade, particularly service trade, has been substantially liberalized. second, progress has been achieved in the liberalization of capital account to adapt to a more flexible exchange rate system. third, major breakthroughs have been made in the reform of the state commercial banks with substantial improvement in their competitiveness and resilience to shocks. at present, balance between supply and demand in the foreign exchange market will mainly be achieved through relaxing the restrictions on the surrender and purchase of foreign exchange by enterprises and individuals. major measures include : reforming the administration of foreign exchange accounts for current account transactions and allowing the enterprises to have greater flexibility in retaining foreign exchange ; reforming the management of surrender and purchase of foreign exchange for non - trade transactions by multinational corporations, allowing qualified multinationals in beijing, shanghai and shenzhen to directly make certain foreign exchange payment or to purchase foreign exchange with rmb to make the payment ; reforming the policy governing the purchase of foreign exchange by individuals to meet the their reasonable demand for foreign exchange to make current account payment ; actively promoting financial innovation to create more opportunities for foreign exchange investment ( china development bank has

now, over 60 central banks have increased their holding of rmb reserves, which encouraged equity and bond managers ’ investment in rmb - denominated assets. this requires shanghai to quicken up the development of supporting measures for financial market in trading, service and consultation to meet the demand of rmb - denominated asset investors globally. 2. developing shanghai into an rmb - denominated financial asset risk management center. with the rmb globalization proceeding, overseas economic entities hold more and more rmb positions and rmb exchange rate becomes increasingly market - oriented. as a result, the overseas entities will face market, liquidity and other risks in asset allocation and fund management, which produces the demand for risk management. pricing and hedging are two major aspects of risk management. for the first aspect, the financial market in shanghai should provide accurate product pricing and continuous trading and quotes so that shanghai could become a major asset pricing center in the world. meanwhile, the depth of financial market and market liquidity should be enhanced. for the second aspect, efforts should be made to improve risk hedging tools, promote derivative innovation and market development, actively develop derivative products and orderly enhance convertibility of rmb under the capital account, and intensify the interaction between onshore and offshore financial markets. 3. building shanghai into a fintech center. in the future, the growth point for global finance lies in fintech, which is also the focus of competition among international financial centers. therefore, we should attach great importance to fintech development. with the development of science and technology innovation center in progress, shanghai has bright prospects in fintech development. the pbc actively supports shanghai to explore for correct methods and paths for the application of new technologies, such as artificial intelligence, big data, cloud computing, blockchain and e - commerce, in the financial field, so as to seize the commanding heights of fintech and promote in - depth integration of finance and technology. 4. building shanghai into a center of high - quality business environment. the development of an international financial center is inseparable from a sound growth environment. shanghai should become the birthplace and proving ground of the first - class financial operation rules, financial laws and regulations and other business environment and regulatory standards. shanghai should also be in the forefront in such aspects as regulatory sandbox tests, financial supervision coordination, comprehensive financial statistics and financial risk monitoring. effective measures can be extended nationwide. 5. building shanghai into a financial talent