All this can derive on an inflation spiral, fueled by higher prices, higher indexation practices, accelerating wages and increases in inflation expectations. These processes can be very persistent and extremely costly to the economy. In some cases they may even result in sudden uncontrolled inflation acceleration with catastrophic consequences. Nevertheless we have learnt the lesson, and we know today the importance of price stability and appropriate risk management. References Bernanke, B. (2007), “Inflation Expectations and Inflation Forecasting,” speech delivered at the Monetary Economics Workshop of the NBER Summer Institute, Cambridge, Massachusetts, July 10. De Gregorio, J. (2007), “Comments,” in Clarida, R. (ed.) G7 Current Account Imbalance, Sustainability and Adjustment, NBER and Chicago University Press, also as Documento de Política Económica No. 115, Banco Central de Chile. Fatas, A. (2002), “The Effects of Business Cycle on Growth”, en N. Loayza y R. Soto (eds. ), Economic Growth: Sources, Trends and Cycles, Banco Central de Chile. Galí, J. y L. Gambetti (2007), “On the Sources of the Great Moderation”, mimeo, UPF. Mishkin, F. (2008), “Monetary Policy Flexibility, Risk Management, and Financial Disruptions,” speech delivered at the Federal Reserve Bank of New York, January 11. Obstfeld, M. and K. Rogoff (2007), “The Unsustainable Current Account Revisited,” in Clarida, R. (ed.) G7 Current Account Imbalance, Sustainability and Adjustment, NBER and Chicago University Press. Ramey, G. y V. Ramey, (1995), “Cross-Country Evidence on the Link between Volatility and Growth”, American Economic Review, Vol. 85, No. 5, pp. 1138-1151. BIS Review 39/2008  11

To increase the chance that project developers can attract private funding, they need to enhance their communication with investors by understanding their risk concerns and speaking in their risk language. This is how we can make projects more bankable. On this front, IFFO has developed a reference term sheet for infrastructure investments in Emerging Markets together with key institutional investors last March. To further facilitate the use of this common language, IFFO has also rolled out a number of capacity building initiatives the past year for all partners. Fintech Apart from infrastructure financing, fintech counts as another most frequently discussed topics in industry events and international conferences in the past year. But like infrastructure financing, we are not just talking about it, we are also doing something about it. HKMA announced September this year a series of measures to facilitate the financial services industry to grasp the opportunities in fintech, covering financial infrastructure, regulatory sandbox, research and talent development, etc. I will leave this to my colleague, Shu-pui, to share more with you in the panel on fintech later this afternoon. But I wish to highlight one point, and that is, fintech is borderless. It requires collaboration among financial centres like Hong Kong and London. A fintech solution that works only in a particular jurisdiction is of little value to clients and financial institutions that are often located half-way across the globe.