BEIJING (Reuters) - China will continue to push forward with the two-way opening of domestic capital markets, the central bank said in its 2015 annual report.

China will allow qualified foreign firms to issue stocks on the mainland, the People's Bank of China said, adding that it would consider allowing foreign firms to issue Chinese depository receipts.

Depository receipts are a mechanism for foreign firms to issue shares on a local stock exchange. Chinese firms have long made use of American depository receipts (ADRs) to issue shares on U.S. exchanges.

Previous efforts to allow foreign firms to issue shares in domestic stock markets have failed, though progress has been made in opening the bond markets to foreign investors.

A central bank researcher said on Friday that foreign firms will be encouraged to issue and trade yuan bonds and sell shares in domestic markets, with a stock connection between Shenzhen and Hong Kong coming "at an appropriate time".

The central bank's annual report, released on Tuesday, gives a summary of China's financial and monetary conditions and also provides an outlook for the economy.

The central bank said it would keep monetary policy prudent, pledged strict control of additional industrial capacity and said it expected mild acceleration of inflation.

(Reporting by Beijing Monitoring Desk; Writing by Elias Glenn; Editing by Jacqueline Wong)