6  See: Corbo V., Landerretche O., Schmidt-Hebbel K. “Does Inflation Targeting Make a Difference” in: Loayza N., Soto R. (ed.) “Inflation Targeting: Design, Performance, Challenges”, Central Bank of Chile, 2002. 7  Gürkaynak R.S., Levin A.T., Marder A.N., Swanson E.T. “Inflation Targeting and the Anchoring of Inflation Expectations in the Western Hemisphere”, forthcoming in Mishkin F., Schmidt-Hebbel K. (ed. ), Series on Central Banking, Analysis and Economic Policies X: Monetary Policy under Inflation Targeting (Santiago, Chile: Banco Central de Chile), 2006 and Gürkaynak R.S., Levin A.T. Swanson E.T. “Does Inflation Targeting Anchor Long-Run Inflation Expectations? Evidence from Long-Term Bond Yields in the U.S., U.K., and Sweden”, Federal Reserve Bank of San Francisco Working Paper 200609, March 2006. 8  King M. “What Has Inflation Targeting Achieved?” in Bernanke B.S., Woodford M. (ed. ): The Inflation-Targeting Debate, NBER, 2005. 9  Strict inflation targeting implies monetary policy focused only on price stability. In contrast, “flexible inflation targeting implies that the central bank is not exclusively concerned about stabilizing inflation around the inflation target but is also concerned with the stability of the real economy, as represented by the output gap, the employment gap, or the unemployment gap.” – Svensson L. “Optimal Inflation Targeting: Further Developments of Inflation Targeting”, October 2005. 10  “Although inflation-targeting central banks normally acknowledge that they are flexible inflation targeters, they are normally not very explicit and transparent and probably not very consistent about the relative weight they attach to stability of other variables than inflation.” – Svensson L., op. cit.

I am also referring to the geographical mix, with a large showing from Asia, in addition to delegates from Europe. This is a testament to the rapid growth of the green bond market in region. 4. Indeed, over the past few years, the green bond market has grown exponentially, including the green bond market in Hong Kong, and we are very pleased about this development. For many years, the HKMA has been working to promote the development of the Hong Kong bond market. Today, Hong Kong is the third largest bond issuer in Asia ex-Japan, behind only the Mainland of China and South Korea. 5. The HKMA plays more than just the promoter role in green finance. As many of you may know, the HKMA is the investment manager of the Exchange Fund. With assets under management over USD500 billion at the end of last year, we are one of the world’s largest asset owners. The HKMA has been very supportive of responsible investment, and has incorporated environmental, social and governance, or ESG, principles into our investment processes. Our disclosure rules would not allow me to give too many details. Suffice to say that items from green bonds to renewable energy projects such as wind farms feature in our portfolio. 6. As a long term investor, the HKMA considers risk and return over a long horizon. We believe looking at an investment proposal through the ESG lens would complement our normal riskreturn analysis, and help unveil the long-term value and risk of an investment. 7.