The growth momentum is expected to pick up further after China’ s announcement to formalise the use of RMB in foreign direct investment (FDI) in 2011. The upside is very significant as China’ s total FDI amounted to USD 116 billion in 2011, or RMB 750 billion equivalent. Besides facilitating the rapid development of the sukuk and dim sum bond markets, more importantly, the Pilot Platform will contribute significantly to financial stability in the Asian region. With the advanced economies undergoing structural adjustment and fiscal consolidation, the two-speed recovery will continue to entice portfolio flows into Asia. The key challenges for Asia are to channel such flows to productive use, reduce concentration in short-term positions of the more volatile asset classes, and to avoid such flows spiking up a  BIS central bankers’ speeches  1  property price bubble. Channelling the inflows into the bond market will serve these useful purposes as the investors are typically institutional investors who take long-term positions in strategic economic sectors. The global financial crisis has reminded us of the destructive powers of a liquidity crunch and the need for quick access to local currency liquidity in times of stress. In particular, the increased risk aversion arising from the recent financial crises and heightened alertness to the counterparty exposure have raised the demand for secured lending. As an illustration, the average tripartite collateral management deals outstanding administered by Euroclear Bank increased substantially from EUR 76 billion in 2001 to EUR 325 billion in 2011.

Euroclear Bank, with over 300,000 securities in 2011 and holds clients’ assets valued at EUR 10.8 trillion, provides a huge reservoir to support cross-border cross-currency collateralised lending. Its large investor base will also provide a powerful platform for global investors to access the markets in Hong Kong and Malaysia. I would like to take this opportunity to thank Bank Negara Malaysia and Euroclear for sharing our vision and working with us to bring it to fruition. The platform will offer a wide range of services to global and domestic investors. These services include a global securities database containing information of international and domestic securities, provision of a single point of entry to allow investors to buy and hold international and domestic bonds through their accounts of the local system, cross-border issuance and settlement of bonds in foreign currencies on a delivery-versus-payment basis, provision of an effective and efficient channel for cross-border cross-currency collateralised lending and borrowing between financial institutions, and automation and standardisation of the corporate action processing such as interest payments and redemption, distribution of corporate action notices, and exercise of custody instructions. My colleague Esmond will explain these arrangements in greater details shortly. Finally, I would like to stress that the Pilot Platform to be launched is meant to be inclusive, not exclusive, and we welcome the participation of more parties. The benefits in promoting bond market development and financial stability can only increase with more bond investment and settlement systems in the region joining as partners.