(From left to right) Zhou Xiaochuan, PBC Governor; Hu Xiaolian, PBC Deputy Governor; Liu Shiyu, PBC Deputy Governor; and Yi Gang, PBC Deputy Governor and administrator of the State Administration of Foreign Exchange (GUO ZHIHUA)

We believe in the next five years there will be significant progress for the yuan's full convertibility under the capital account, but there is no detailed schedule now.

Diversified reserves

Yi Gang: China's foreign exchange reserves have grown rapidly to the point where it is the largest in the world today. We have been diversifying our foreign exchange reserves.

In terms of currencies, China holds foreign exchange reserves in a currency basket, including major convertible currencies, reserve currencies and emerging market currencies. In terms of the varieties of assets, only if the assets conform to the requirements of safety, liquidity and rate of return, will China consider investing with strict requirements meant to prevent risks.

China will consider U.S. treasury bonds, gold and other kinds of reserves to diversify its foreign exchange reserves, but the investment will be made prudently after measuring the safety, market prospect and rate of return of various assets.

Such a diversified composition has actually ensured the safety and stable returns of our foreign exchange reserve assets.

Financing for SMEs

Zhou: Since 2010, small and medium-sized enterprises (SMEs) have acquired more bank loans. Previously, large enterprises got most of the loans. But in 2010, large, medium-sized and small enterprises received almost the same amount of loans from commercial banks.

It is normal for capital prices to rise when the macroeconomic situation changes and the monetary policy switches from a moderately loose one to a prudent one. Enterprises of various sizes may all have to bear an increasing interest rate.

Small enterprises may suffer more from the increasing interest rate, so the government encourages commercial banks to give more support to them.

The central bank will incorporate more information about SMEs into its credit reference database. Now, almost all SMEs with loan records have been incorporated into the central bank's credit reference database. The credit reference system can provide figures for commercial banks to examine an enterprise's credit information so that they can make more concise pricing when granting loans to SMEs.

Global competition

Liu Shiyu: During the decade following China's entry into the WTO, the country's financial industry has made rapid progress in its opening up and reform, and its international competitiveness improved significantly. In the decade, reform of financial institutions, including both state-owned banks and rural credit cooperatives, provided the basis for the financial industry reform.

After the reform process, all state-owned banks have been listed as joint stock banks, and rural credit cooperatives are now active in serving the development of agriculture and farmers.

State-holding banks rank among international bests in terms of returns on both assets and invested capital, as well as of market value.

Recently, international organizations lowered the rankings of some big Chinese banks. This is a good thing to us: It warns us of being calm.

Chinese banks are still less competitive than their foreign counterparts, so China will further reform the management of commercial banks by means of improving corporate governance and optimizing both their ownership structure and assets composition.

After reform, state-owned banks, as listed companies, have established their respective stockholders' meetings, boards of directors, boards of supervisors and senior management teams. We should respect their legal rights as listed companies and also encourage them to participate in international competition under the background of economic globalization and the development of China's export-oriented economy.

As for the reform of small financial institutions, the key point is to improve their capital adequacy and financial soundness so that they can better serve agriculture, the countryside, farmers and the development of SMEs. The government will make some adjustments in relation to the market environment and its supervision rules, with the aim of encouraging financial institutions of various types to make innovations and improve their service.