Yi Gang: Shanghai International Financial Center's Five Key Focal Areas

Yi Gang, Governor of the People's Bank of China, attended the 12th Lujiazui Forum (2020) and delivered a keynote speech at Plenary Session 1. Governor Yi Gang made further elaborations on the five key focal areas of Shanghai International Financial  development.

First, Shanghai is becoming an open hub for RMB-denominated asset allocation. Global institutional investors are able to conveniently conduct cross-border investment and financing activities in Shanghai, especially with China's current sound economic fundamentals. China’s monetary policy remains in the normal range. Though the interest rate of renminbi is the lowest among all developing countries’ currencies, the spread between renminbi and major convertible currencies remains quite high. Therefore, RMB-denominated assets are very attractive for global asset allocation.

Secondly, Shanghai is becoming a risk management  for RMB-denominated financial assets. All elements of risk management in Shanghai are becoming more sophisticated: 1) continuous pricing of all types of RMB-denominated assets achieved; 2) sufficient liquidity, depth and breadth of RMB financial markets allowing buying and selling at any time; 3) financial futures, commodity futures, interest rate, exchange rate, derivatives and other advanced tools are already available, which offers the possibility of efficient risk hedging.

Thirdly, Shanghai is becoming a hub of financial opening up. In recent years, Shanghai has been opening up to the outside world at an accelerated pace, with a number of world-renowned financial institutions settling in Shanghai one after another, which has become a major attraction for the world's top financial talents. At the same time, financial regulatory capacity must also be commensurate with the degree of financial openness, as financial security safeguarded amid financial opening up brings real security.

Fourthly, Shanghai is becoming a demonstration centre of excellent business environment. A market-oriented, law-based and international business environment is gradually taking shape in Shanghai, and specialized institutions such as the financial court and the court of financial arbitration have been established one after another. Shanghai has become the best testing ground for innovative financial operation rules and standards. To build itself into an international financial , Shanghai can also try further pilots in freely usable RMB and RMB convertibility under capital account.

Fifthly, Shanghai is becoming a fintech hub. Shanghai cannot become an international financial  without the support of fintech. Shanghai is now accelerating the development into a fintech hub, exploring the extensive application of such new technologies as AI, big data and cloud computing in the financial sector.