Speech by Jiang Jiangqing, President of the ICBC at the Tenth Anniversary of the CFETS and Forum on China’s Money Market

On the occasion of the tenth anniversary of the China Foreign Exchange Trade System (CFETS) and the opening ceremony of the China's Money Market Forum, please allow me, on behalf of the Industrial and Commercial Bank of China (ICBC) and other member banks, to extend warm congratulations to the CFETS.

Over the past ten years, the CFETS, via its advanced electronic service platform, has played an indispensable role, guaranteeing the sound operation of the FX purchase and sale system and improving the RMB exchange rate forming mechanism, interest rate liberalization, monetary policy transmission and financial supervision. Ten years of effort have resulted in splendid achievements. Now the CFETS has become an indispensable force in China's financial market.

The past ten years have been a decade of rapid economic growth in China. The external situation for the operation of financial institutions changed continuously, and the condition of funds has shifted from dearth to relative oversupply. The liability/asset structure of commercial banks has undergone fundamental change. As of the end of 2003, the spread of deposits and loans hit 4.9 trillion yuan among financial institutions within the country. As financial institutions operating and managing risks, commercial banks traditionally utilize the interest gap from extending loans or absorbing client operational risks as a major source of profits. With the rising ratio of non-loan-interest capital to total capital, commercial banks are faced with increasing liquidity pressures, and are forced to switch their traditional operational models, adjust liability/asset structures, and find new breakthroughs for profit growth.

The CFETS has provided us with quite a broad arena to manage liquidity, transfer risk, and explore business space. As one of the first participants in the interbank FX, lending and bond markets, the Industrial and Commercial Bank of China (ICBC) has obtained substantial achievements in the market with the help of support and services offered by the CFETS. The ICBC has concluded US$90.4 billion worth of FX trading in the past decade, claiming a market share of 26.35 percent. Our trading volume in the interbank lending and bond market over the past eight years totals seven trillion yuan, amounting to about ten percent of the total market.

The CFETS has played an active role in the development and reform of China's commercial banks. As the economy and national finance develop further and opening up accelerates, China's money market will embrace an ever more challenging era. The interbank market continues to expand; the CP market is growing up quickly; conditions for developing money market funds are becoming sophisticated; financial innovations such as forward and derivative transactions are ready to debut. We expect and believe that with the advanced technology gleaned from developed markets, the CFETS will make the best use of its advantages of a developed network system and rich market experience to build a major trading platform and a pricing center for RMB-related products. This platform, nationwide but with global horizons, will combine product innovation and trading, price forming and quoting, fund clearing and settlement and information services.

These past ten years have flown by us. The CFETS now stands at a new, higher starting point. As market participants, we will, as usual, actively participate in and support market construction and work with the CFETS to promote the development and prosperity of China's financial market. Finally, I would like to wish the tenth anniversary and the Forum complete success, and the CFETS a more brilliant future. Thank you.