Contents -- Preface -- Acknowledgment -- Part I The Chinese Economy and Financial System -- 1 Chinese Yuan Revaluation and Derivative Products -- 1.1 The Original "Legs" that Are Running -- 1.2 The Voice of "the Congress" -- 1.3 Voices Echoed "the Congress" -- 1.4 Voices from Other Continents -- 1.5 The Voices of Other Spheres -- Nobel Laureate Robert Mundell (March 16, 2002) -- Stephen S. Roach (July 7, 2003) -- International CNN (July 18, 2003) -- Kenneth Rogoff (July 23, 2003) -- 1.6 Joint Voices of G7 Industrial Nations and Beyond -- 1.7 From Depreciation to Appreciation -- 1.8 Summary -- 2 Open-Door Policy and a Quarter-Century Reform -- 2.1 Household Economic Responsibility System -- 2.2 Open-Door Policy and Special Economic Zones -- 2.3 A Decade of Experimentation with a Market Economy -- 2.4 The Beijing Olympic Games and the Shanghai World Exhibition -- 2.5 World Trade Organization (WTO) Entrance -- 2.6 Conclusions -- 3 The Chinese Economy -- 3.1 Population -- 3.2 Education -- 3.3 Foreign Direct Investment -- 3.4 Exports and Imports -- 3.4.1 Development in the Past Quarter-Century -- 3.4.2 Trade Contribution to Economy -- 3.4.3 Growth of Imports -- 3.4.4 Contribution of Foreign Enterprises -- 3.5 Foreign Reserve and Foreign Debt -- 3.6 GDP and GDP per Capita -- 3.6.1 International Comparisons -- 3.6.2 Per Capita GDP -- 3.6.3 Energy Consumption and GDP Growth -- 3.7 From Stimulating Fiscal Policy to Stimulating Consumption Policy -- 3.8 Conclusions -- 4 Banking System in China -- 4.1 The PBOC -- 4.2 Financial Institutions -- 4.3 Chinese Banks -- 4.3.1 Big Four State-Owned Commercial Banks -- 4.3.2 Nation-Wide Joint Stock Banks -- 4.3.3 Local Joint Stock Banks -- 4.3.4 Private Commercial Banks -- 4.4 Foreign Banks in China -- 4.5 Non-Banking Financial Institutions -- 4.6 Instruments of Banking Control in China -- 4.7 Inter-Bank Money Market.

4.8 Problems in the Chinese Banking System -- 4.8.1 Non-Performing Loans -- 4.8.2 Loan-Making Procedures -- 4.9 China's WTO Promises for Commercial Banking -- 4.9.1 Geographic Coverage -- 4.9.2 Clients -- 4.9.3 License -- 4.10 Conclusions -- 5 The Chinese Capital Markets -- 5.1 Stock Market -- 5.1.1 Brief Introduction -- 5.1.2 The Two Exchanges -- 5.1.3 Share Structure, Intermediaries, and Regulation -- 5.1.4 Hong Kong Stock Exchange and International Listing -- 5.2 Bonds Market -- 5.3 Fund Management -- 5.4 Futures Market -- 5.4.1 Historical Development -- 5.4.2 Futures Contracts in China -- 5.4.3 The Shanghai Futures Exchange (SHFE) -- 5.4.4 Greater Role for China's Futures Market to Play in theWorld -- 5.5 Insurance Industry in China -- 5.6 QFIIs and Foreign Securities Companies in China -- 5.7 Problems Facing China's Capital Market -- 5.8 China's WTO Promises in the Securities and Insurance Market -- 5.9 Measures to Accelerate Capital Market Development -- 5.10 Conclusions -- 6 Foreign Exchange Administration -- 6.1 The State Administration of Foreign Exchange -- 6.1.1 Functions and Responsibilities -- 6.1.2 Internal Set-up -- 6.1.3 Branch Offices -- 6.2 Historical Development -- 6.2.1 Pre-Reform Era (1953-78) -- 6.2.2 Pre-Market Economy Era (1979-93) -- 6.2.3 Market Economy Era -- 6.2.4 RMB Exchange Rates from 1978 to 2003 -- 6.3 Current Foreign Exchange Administration in China -- 6.3.1 Managed Floating System -- 6.3.2 Significant Liberalizing Measures -- 6.3.2.1 New Account System is Introduced into the Banking System -- 6.4 Capital Account Convertibility in China -- 6.5 The Chinese Foreign Exchange Market -- 6.6 Foreign Invested Enterprises and Foreign Exchange Management -- 6.7 Shanghai International Financial Center -- 6.8 Conclusions -- Part II Foreign Exchange Market and Foreign Exchange Derivatives Market -- 7 Foreign Exchange Market.

7.1 Foreign Exchange Market -- 7.2 Major Currencies of Foreign Exchange Market -- 7.3 Uses of Foreign Exchange Market -- 7.4 Foreign Exchange Centers in the World -- 7.5 Singapore and Hong Kong -- 7.6 Emerging Market Currencies -- 8 Foreign Exchange Forwards and Swaps -- 8.1 Foreign Exchange Forwards -- 8.2 Pricing Foreign Exchange Forwards -- 8.3 Foreign Exchange Forwards in Emerging Markets -- 8.4 Foreign Exchange Swaps -- 8.5 Currency Swaps -- 8.6 Interest Rate Swaps with Major Currencies -- 8.7 Conclusions -- 9 Non-Deliverable Forwards and Swaps -- 9.1 Non-Deliverable Forwards -- 9.2 How NDFs Work -- 9.3 Development of the NDF Market -- 9.3.1 NDF Distribution -- 9.3.2 Market Turnover -- 9.3.3 Transaction Sizes -- 9.4 Examples of Uses of NDFs -- Hedging Foreign Exchange Risk Using NDFs -- Speculating on Foreign Exchange Appreciation Using NDFs -- 9.5 Master Agreement of ISDA -- 9.6 Non-Deliverable Swaps -- 9.7 Problems with NDFs and NDSs -- 9.8 Impacts of NDFs and NDSs -- 9.9 Institutions Trading NDFs and NDSs -- 9.10 Services to NDF/NDS Market -- 10 Foreign Exchange Futures -- 10.1 Introduction -- 10.2 Foreign Exchange Futures -- 10.3 Foreign Exchange Futures Trading Volumes -- 10.4 Differences between Forwards and Futures -- 10.5 Major Functions of Futures Market -- 10.5.1 Managing Risk -- 10.5.2 Price Discovery -- 10.5.3 Information Dissemination -- 10.6 FX Futures in Developing Economies -- 10.7 Conclusions -- 11 Foreign Exchange Options -- 11.1 Introduction -- 11.2 Call and Put Options -- 11.3 Options Premiums -- 11.4 Major Differences between Futures and Options Contracts -- 11.5 Currency Futures Options -- 11.6 Exotic Foreign Exchange Options -- 11.6.1 Vanilla vs Exotic Options -- 11.6.2 Development of Exotic Options -- 11.6.3 Major FX Exotic Options -- 11.6.4 Turnovers of Major FX Exotic Options.

11.7 Foreign Exchange Options in Emerging Markets -- 11.8 Conclusions -- Part III The Asian Financial Crisis and Financial Derivatives -- 12 The Asian Financial Crisis -- 12.1 Thai Baht Floating and the Crisis -- 12.2 Singapore and Hong Kong -- 12.2.1 Singapore -- 12.2.2 "Double Play" in Hong Kong -- 12.2.3 Banking Sector Performances in the Two Banking Centers -- 12.3 Capital Flows and Asian Financial Crisis -- 12.3.1 Capital Flows to Asian Markets -- 12.3.2 Total Amounts Owned to US Banks -- 12.4 Derivatives Associated with Capital Flows -- 12.4.1 Derivatives and Capital Flows -- 12.4.2 US Money Center Banks -- 12.4.3 Derivatives/Loan Ratios -- 12.5 FX Market Volatility, Transactions Costs, and Liquidity -- 12.6 Hedge Funds -- 12.7 Institutions Involved -- 12.7.1 The US Money-Center Banks -- 12.7.2 European Financial Institutions -- 12.7.3 Local Investment Banks -- 12.8 Summary and Conclusions -- 13 FX Forwards and Futures during the Asian Crisis -- 13.1 Central Banks' Intervention in Forward Markets -- 13.1.1 Interventions -- 13.1.2 Ways to Obtain Local Currency for Delivery -- 13.1.3 Impacts of Forward Intervention on Foreign Reserve -- 13.2 Thai Baht Forwards and the Asian Financial Crisis -- 13.2.1 The First Episode -- 13.2.2 The Second Episode -- 13.2.3 The Most Severe Attack -- 13.2.4 The Peak of Attack -- 13.2.5 Market Participants -- 13.2.6 Market Reactions -- 13.3 Korean Won Forwards -- 13.3.1 Foreign Reserve Deposits in Domestic Banks -- 13.3.2 Forward Volume -- 13.3.3 Derivatives Trading Value -- 13.3.4 Profit and Loss of Various Participants -- 13.4 FX Forward Market in Singapore -- 13.5 Hong Kong Dollar Forwards -- 13.5.1 The HKMA's Intervention Activities in the Forward Market -- 13.6 Brazilian Real Futures -- 13.7 Summary and Conclusions -- 14 NDFs during the Asian Financial Crisis -- 14.1 NDFs in Asia -- 14.1.1 Turnovers.

14.1.2 Singapore and Hong Kong -- 14.1.3 Tokyo -- 14.2 Philippine Peso NDF -- 14.3 Korea Won NDF -- 14.3.1 Major Policy Changes -- 14.3.2 Development of Offshore NDF Market -- 14.3.3 NDF Compared with the Spot Market -- 14.3.4 Onshore and Offshore NDF Markets -- 14.3.5 Comparison between Forward and NDFs -- 14.4 Taiwan -- 14.4.1 Early Development of NTD NDFs -- 14.4.2 Turnover during the Asian Financial Crisis -- 14.4.3 Interventions of NTD NDF -- 14.4.4 Comparison between the Won NDF and NTD NDF -- 14.4.5 Coexistence of Offshore and Onshore NDF Markets -- 14.5 Chinese Yuan NDF -- 14.5.1 Early Development -- 14.5.2 Pressure for Devaluation during the Crisis -- 14.5.3 Responsibility and Diminished Pressure for Devaluation -- 14.6 Russian Ruble NDF -- 14.7 Summary -- 15 Swaps -- 15.1 Currency Swaps -- 15.1.1 Malaysian Ringgit Currency Swaps -- 15.1.2 Indonesian Rupiah Currency Swaps -- 15.1.3 Korean Won Currency Swaps -- 15.2 Credit Default Swaps -- 15.2.1 Credit Derivatives -- 15.2.2 Credit Default Swaps -- 15.2.3 Geographical Differences and Notional Amount Outstanding -- 15.2.4 Difficulty in Pricing Credit Default Swaps -- 15.3 Total Return Swaps -- 15.3.1 Concept of Total Return Swaps -- 15.3.2 Popularity in Asia -- 15.3.3 Korean and Indonesian Counterparties -- 15.3.4 J.P. Morgan and Korean Securities -- 15.3.5 Korean Trusts -- 15.4 Swaps in Singapore and Hong Kong -- 15.4.1 Singapore -- 15.4.2 Hong Kong -- 15.5 Summary and Conclusions -- 16 Options, Structured Notes, and Other Products -- 16.1 "Callable" and "Put-able" Debt -- 16.1.1 Concepts of Embedded Options -- 16.1.2 Asian Debt with Embedded Options -- 16.1.3 Types of Embedded Put Options -- 16.1.4 IMF Estimation of Put-able Debts -- 16.2 Currency Options in Singapore -- 16.3 Options in Hong Kong during the Asian Financial Crisis -- 16.3.1 Foreign Exchange and Interest Rate Options.

16.3.2 Stock Index Options.