. most important, the basic law prescribes a separate currency for hong kong - the hong kong dollar - which is to continue to be freely exchangeable and fully backed by reserves. these points are worth stressing, because there has been much misunderstanding about hong kong ’ s position. the challenges ahead i believe we should also look to the future, and not just dwell on current anxieties or deal with the political fall - out from our recent measures against market manipulation. as i see it, there are two main challenges ahead. one is the challenge before every economy in the region, including hong kong, to pull ourselves out of the economic difficulties that now face us. the other is a challenge to the global financial community as a whole. for hong kong, the challenge is to see through the economic adjustment that is now in train, to continue to promote our competitiveness, and to plan for economic recovery. there is no denial that this is a painful process. nor can there be any pretence that the current downturn will be over quickly, whatever the positive signs in the markets over the past few weeks. in the financial markets we need to be vigilant against future attacks and to introduce further safeguards in our financial system. these safeguards will include improvements to cross - market surveillance in hong kong, and an in - depth exploration of possibilities for further strengthening the resilience of the currency board system - an exercise which is now making good progress. more widely, we need to continue to develop hong kong ’ s position as a premier international financial centre. practical measures recently announced by the chief executive of the hksar will help in this : they include schemes ranging from the upgrading of the security and efficiency of our entire financial infrastructure to the expansion of research facilities in the form of a monetary institute affiliated to the hkma. the emphasis in all of this is not on intervention, but on facilitation. as a government, we do not direct the form that economic growth should take : we simply strive to provide the best environment that we can to enable growth to take place. in the financial sphere that means a stable currency, a credible and secure banking system, and markets that sustain, rather than undermine, economic development. there is much that we can do - and have done - locally to achieve these aims. but increasingly, the solutions have to be global solutions, because, as the events of the last year have amply demonstrated, some of the most intractable problems

norman t l chan : bond connect – enhancing hong kong as an international financial centre remarks by mr norman t l chan, chief executive of the hong kong monetary authority, at the bond connect launch ceremony, hong kong, 3 july 2017. * * * the honourable carrie lam cheng yuet - ngor, deputy director huang liuquan, deputy director qiu hong, financial secretary paul chan, deputy governor pan gongsheng, mr ck chow, distinguished guests, ladies and gentlemen, 1. good morning. 2. i am very pleased to join you today for the launch of bond connect. bond connect marks another milestone of mutual access of capital markets between the mainland and hong kong, following the shanghai - hong kong stock connect and the shenzhen - hong kong stock connect. it is also another important measure of the central government to support hong kong ’ s development as an international financial centre. 3. a key function of hong kong as an international financial centre is financial intermediation, providing efficient and safe conduits for fund flows. the establishment and smooth operation of these conduits shall be underpinned by suitable and sound financial infrastructures. over the years, the hong kong monetary authority ( hkma ) has endeavoured to build our financial infrastructures, from the real time gross settlement system to the central moneymarkets unit ( cmu ) for debt securities settlement, which have laid a solid foundation for hong kong ’ s development as an international financial centre. 4. bond connect is a new financial infrastructure established through the connection between hkma ’ s cmu and the relevant central securities depositories ( csds ) on the mainland. under bond connect, eligible overseas investors can settle and hold their mainland bonds through cmu using nominee holding arrangement. nominee holding arrangement is widely used by investors in international capital markets as it provides greater convenience and flexibility to investors and market participants. cmu also adopts nominee holding arrangement and provides nominee holding services for more than 200 local and international banks, trust companies and custodians through its linkages with euroclear, clearstream and other regional csds. the continued liberalisation of the mainland ’ s capital account and rmb internationalisation will progressively raise demand from overseas investors for rmb asset allocation, while the mainland has been proactively rolling out measures to facilitate overseas investors ’ access to its bond market. we believe that bond connect would enhance overseas investors ’ participation in the mainland bond market. 5. i wish bond connect a great success.