We understand that good ideas alone would not come to fruition without either one of the following: funding support and a conducive environment that allows mistakes and failures. In fact, numerous success stories in history prove that trial and error is necessary for innovation. To encourage banks to try more, in turn stimulating innovation in the banking industry, we are going to channel our focus on two areas: funding and policies. 38. Today, I am excited to announce that the HKMA is doing preparation work to further upgrade 4/5  BIS central bankers' speeches  our Fintech Supervisory Sandbox. To begin with, we are exploring the possibility of providing funding support to qualified fintech projects. Our discussion with the Innovation and Technology Commission has just started, and I hope to share more details with you in due course. We hope the enhanced Sandbox could speed up the launch of innovative financial products and solutions, ultimately reducing their Time to Market and facilitate banks in making commercial gains while serving the public. 39. To ensure that no banks, regardless of their size, will be left behind in the cascading wave of innovation, the HKMA will join forces with our strategic partners, including the Hong Kong Science and Technology Parks (HKSTP) and Cyberport, to introduce utilities and necessary support to banks to speed up their technology adoption. 40. Through supportive measures, we want to foster an encouraging environment, in which all stakeholders, be they banks, non-banks, or the academia, can trust and flourish. Closing 41.

We believe this new fintech strategy would provide the shot in the arm to elevate the banking industry to new heights. Brief recap of key achievements 6. Before I delve more deeply into the strategy, let us have a look at where we currently stand. 7. Last year, eight virtual banks launched their services to the public, marking a key milestone in Hong Kong’s Fintech Journey. The usage of Faster Payment System (FPS) has witnessed substantial growth since launch. So far, it has recorded over 8 million registrations, and is used by the general public in person-to-person payments, government payments, and payments to merchants. On average, more than 630,000 transactions are conducted daily, over twofold than a year ago. Our Fintech Supervisory Sandbox was also well received and more than 200 initiatives have been tested since launch. 8. These encouraging figures show how the HKMA’s Smart Banking initiatives have significantly driven the digital transformation of banking services. They also demonstrate Hong Kong people’s willingness to embrace fintech; and set us up for further fintech developments. Customers’ digital appetite will outlast the pandemic 9. Unfortunately, the city and the world were subsequently battered by COVID-19. But Hong Kong’s pre-pandemic fintech efforts were sufficient, for the time being at least. So we were able to enjoy largely uninterrupted high-quality digital financial services during the pandemic, allowing a wide range of commercial activities to continue in the city. In fact, COVID-19 demonstrated the sheer power of fintech. Fintech can fulfil gaps when traditional banking services are compromised. 10.