as a payment and settlement service provider, supervisor and operator of a modern payment and settlement system, the pbc has made great efforts in guiding and promoting the modernization of china ’ s payment and settlement system. as an important component of financial infrastructures, the payment system demands the participation and cooperation of commercial banks and other financial institutions, despite their different roles in financial service in terms of establishment, development and operation. the mainland initiated the construction of payment system later than hong kong did. in mainland, computer network and communication infrastructures indispensable to financial infrastructure are at different levels due to regional economic imbalances, given china has a large population and wide territory. therefore, the mainland must consider various elements such as business, technology and regional economic situation when constructing financial infrastructure. currently, we focused on the construction of a payment system. the large value payment system has been extended nationwide in june 2005, and the layout of a modern payment system will be adjusted in accordance with technology advancement, the development of commercial banking business and data concentration level. the retail payment system is under construction and will be extended nationwide at end - june, 2006. at current stage, our priority is still on constructing a disaster back - up system, optimizing system functions and building a bill exchange system nationwide based on image technology. ii. closer economic and trade ties between the mainland and hong kong will provide much broader room for cooperation in financial infrastructure, especially the payment and settlement system. the mainland and hong kong have maintained good cooperation in economic and financial field for a long period of time. particularly, after hong kong returned to the motherland in 1997, the first important cooperation was to face with the asian financial turmoil. in recent years, with the increase in commercial, trade, investment and personal exchange between the mainland and hong kong, cooperation became much smoother. the launch of cepa not only produced zero tariff and facilitated commodity trade and transportation, but also promoted the fast development of service trade, such as the acceptance of professional certificates. cooperation in financial field between the mainland and hong kong has also achieved great progress in recent years. in november 2003, with the authorization of the state council, the pbc announced to provide settlement arrangement for personal rmb business of hong kong banks. many new financial instruments were introduced in 2004, such as the rmb bankcards with unionpay logo were accepted in hong kong from january 2004. in february 2004, participating banks in hong kong started to conduct rmb deposits, exchange

such a wide territory. hong kong has its advantage on foreign exchange clearing and settlement and providing payment services for capital market and fx market. both sides are complementary to each other in financial infrastructures with different comparative advantages, and could have more rooms of cooperation. moreover, development of the national payment & settlement system relies on joint endeavors of the central bank, regulatory authorities and various financial institutions. i believe, with our strong confidence and unremitting efforts, payment & settlement system, either in the mainland or hong kong, will have promising perspectives. thank you.