Developments in Mainland China were significant for both the international financial system and the status of Hong Kong as an international financial centre. The Mainland's 11th Five-Year Plan, promulgated in March 2006, set out the policy direction for expediting financial reforms. With its foreign exchange reserves surpassing US$1 trillion, the Mainland introduced a liberalised framework for portfolio investment outflows, known as the Qualified Domestic Institutional Investors (QDII) Scheme.

Against this backdrop, the HKMA improved its research and monitoring of regional and Mainland economic and financial issues to promote greater financial stability in Asia including Hong Kong. Its leadership of, and participation in, regional co-operation initiatives on bond market development, monitoring of cross-border fund flows and crisis management were further strengthened during the year. The HKMA developed a "1-3-5 financial development blueprint" for fostering closer financial co-operation and building bigger markets both in Hong Kong and on the Mainland. Further expansion of renminbi business was achieved through collaboration with the Mainland authorities. The participation of the HKMA in these co-operative efforts in the region and on the Mainland will help reinforce Hong Kong's position as a leading financial centre and as China's international financial centre.