SHANGHAI - Financial reform is about to move faster in the Shanghai free trade zone (FTZ), a central bank official said on the eve of the zone's first anniversary.

There have been no regional or systemic risks in the FTZ, thanks to an accounting system enabling cross-border fund flows, said Zhang Xin, deputy head of the Shanghai Head Office of the People's Bank of China (PBoC).

Offshore investors have nonetheless complained about slow progress by financial regulators, and the PBoC, China' s central bank, has issued a thirty point guideline which should deal with some extant problems.

"From now on, financial reforms will move faster, with more substantive measures coming online," Zhang said.

Investors expected the FTZ to be bolder, but the central leadership has repeatedly shown itself to be deeply risk-averse with regard to the onshore financial system. With high expectation on one hand and low tolerance for mistakes on the other, the central bank has been trying to build a system where cross-border fund flows are closely scrutinized, Zhang said.

The first batch of zone policies has been introduced in the rest of the country. Mainland companies can now raise renminbi loans in offshore markets where interest rates are lower. Multinational firms can manage subsidiary cash flow in a central pool and have more freedom to hedge exchange risks. The PBoC has also liberalized interest rates on small-cap foreign currency deposits in the entire Shanghai region.

The free trade account, the authorities' answer to opening China's capital account in the FTZ, was launched in June as a risk-proof framework for the most tricky reforms.

"International experience has shown that opening a country's capital account brings major risks if the pace and degree are not properly managed," said Liu Shengjun, deputy director of Lujiazui International Finance Research Center.

Managers of the 10 banks authorized to use the free trade account told Xinhua that, so far, it has proved next to useless. Business conducted through these accounts can be done just as easily through a regular account.

However, according to Zhu Ying, a manager at the Shanghai branch of the Agriculture Bank of China, the free trade account is laying the groundwork for opening up and innovation and will eventually evolve into a complex and extensive financial eco-system. The Shanghai Gold Exchange opened spot gold trading to global investors with free trade accounts on Sept. 18, allowing them to trade renminbi-denominated gold contracts.

"[The free trade account] is designed to prevent offshore fund volatility from seeping into the onshore financial system. Funds can permeate from the free trade account to a regular domestic bank account," Zhu said.

Briefing on the FTZ on Friday, Zheng Yang, director of the Shanghai Financial Services Office, declared that the free trade account would be used to conduct stress tests for new reforms. Financial markets will open faster to foreign investors through the FTZ, with a crude oil futures contract ready before the end of the year.

Some argue that the success of the FTZ lies in connecting domestic demand with offshore investors. "There are already well established financial centers in Tokyo, Hong Kong and Singapore. If the Shanghai FTZ wants to stand out, it has to show some unique advantages," said Lin Caiyi, chief economist with Guotai Junan Securities.

The greatest advantage the Shanghai FTZ has, according to Lin, is its proximity to Lujiazui, home to China's leading financial institutions.

"Offshore investors will only view the FTZ in a more positive light when they see opportunities to access the financial heartland through the zone." Lin said.