I anticipate this could play out in three dimensions: •  First, there will be a need to facilitate the further development of the RMB banking market so that offshore RMB liquidity can be efficiently allocated, which would enable banks in need of RMB to easily obtain it from banks with surplus liquidity. We can already see the market moving in this direction as banks begin to diversify and expand their RMB assets progressively. Meanwhile, the introduction of a crossborder collateral management arrangement opens an efficient channel for financial institutions to widen their liquidity sources and obtain offshore RMB liquidity from Hong Kong, using even non-RMB papers for repos. •  Second, there will also be a need to facilitate the development of RMB capital markets. On this front, Hong Kong’s dim sum bond market has shown encouraging development. Already, multilateral companies and international financial institutions such as the World Bank and the Asian Development Bank have tapped the dim sum bond market. For the market to develop further, there will be a need to continue to broaden the participation of both issuers and investors. Additionally, the tenor and variety of debt instruments will need to increase to meet the financing requirements of different issuers while satisfying the appetites of different investors. There has been repeated RMB sovereign bond issuance by the Ministry of Finance and more regular issuance in due course will help to gradually build a benchmark yield curve.

Public-Private Partnerships 21 Moving on, I would like to touch on public-private partnerships – the other equally important arm of our alternative risk transfer strategy. 22 Continued industrialisation, expanding cross-border trade, and infrastructure development are at the heart of Asia’s growth. These create vast investment opportunities in the region, and will also drive demand for insurance solutions to mitigate a variety of business risks. 23 One such initiative is China’s One Belt One Road (OBOR) initiative, the most ambitious infrastructure project of its kind to-date. OBOR seeks to connect China and countries across Asia, the Middle East and Europe through a series of land and sea trade routes. Vital public infrastructure, such as roads and railways, gas pipelines, power plants and ports will be built in over 60 countries, with total estimated infrastructure investment to exceed USD 1 trillion. 24 However, modern risks lie along these ancient routes. There are a myriad of geopolitical, legal, credit and environmental risks in many countries along the corridor. Political instability, rioting, terrorism and conflict can lead to contractual issues and financial losses. Unfamiliarity with legal frameworks and regulations can lead to expensive delays. Non-payment risks can be exacerbated by emerging markets’ vulnerability to external shocks, such as currency and commodity price volatility. 25 The MAS is thus seeking to co-create new risk solutions with regional governments and the industry, and utilise these solutions on a pre-emptive basis to help governments and investors safeguard against key risks like natural catastrophes, construction risks and political risks.