BEIJING - Central bank governor Zhou Xiaochuan said Wednesday that innovative methods should be used to reform China's capital markets.

Zhou said reforms should include boosting the capability of capital markets to serve the real economy so that more direct financing can be provided to small- and micro-sized companies, as well as cultural industry enterprises.

Meanwhile, reforms should be made to raise the transparency of capital markets, consolidate basic market mechanisms and improve rules concerning IPOs, mergers, acquisitions and delistings, Zhou said at an industrial seminar held in Beijing.

China's stock market currently ranks third in the world in terms of market value after the United States and Japan.

Zhou said the People's Bank of China, or the central bank, will support the development of cross-border exchange-traded fund products, as well as expand the investment scale for qualified foreign institutional investors (QFIIs) and yuan-based QFIIs.