pan gongsheng : speech - launch ceremony of swap connect speech by mr pan gongsheng, deputy governor of the people's bank of china, at the launch ceremony of swap connect, hong kong, 15 may 2023. * * * distinguished chief executive john lee, deputy director wang linggui, deputy director yin zonghua, financial secretary paul chan, honorable guests, and dear friends from the press, good morning! i am glad to join you to celebrate the official launch today of swap connect. on behalf of governor yi gang and party secretary guo shuqing of the people's bank of china ( pboc ), and on behalf of the pboc and the state administration of foreign exchange ( safe ), i would like to extend warm congratulations! i would also like to express our heartfelt thanks to all our colleagues and market participants for their hard work and efforts to make swap connect a reality! with the approval of the central government, the cooperative initiative was announced last july to develop mutual access between the mainland and hong kong and interest rate swap markets, known as swap connect. building on bond connect, swap connect will enable overseas and domestic investors to participate in the financial derivatives markets in the mainland and hong kong through a connection between infrastructure institutions in both places. it aims to better meet investors'demands for interest rate risk management. over the past year, the pboc, the hong kong securities and futures commission ( sfc ), and the hong kong monetary authority ( hkma ) have enhanced communication and collaboration, and together we've steadily advanced institutional arrangements and guided infrastructure institutions in both places to complete the preparations in various aspects such as rules and systems. today, the official launch of swap connect is another milestone in the opening - up of china's financial markets to the outside world. it fully demonstrates the central government's emphasis on consolidating and enhancing hong kong's status as an international financial center, and its firm confidence in hong kong's long - term prosperity, stability and development. as a major international financial center around the world, hong kong boasts a highly open business environment, a profound financial market system, perfect financial infrastructures, and an international regulatory system for financial markets. over the years, we've worked together with hong kong's financial sector to raise the efficiency and level of financial market connectivity between the mainland and hong kong, so as to constantly inject new vitality and momentum into deepening reform and opening

and rectified the behavior of luring depositors with manual interest subsidy. in the short term, these regulatory measures will have the effect of " squeezing water " out of the financial aggregate data, but that does not stand for a shift in the monetary policy stance. instead, it will help us more in improving the efficiency of monetary policy transmission, achieving a balanced pace of credit growth, alleviating the distortions in resource allocation, easing the problem of circulating funds for the sake of arbitrage, 2 / 7 bis - central bankers'speeches and forestalling and defusing financial risks. it will also be conducive to providing highquality financial services for economic and social development as well as the healthy development of financial institutions and financial markets. as for exchange rates, the rmb exchange rate has remained basically stable in complicated circumstances. entering this year, we have seen the major advanced economies postponing once and again their timing of monetary policy reversal. meanwhile, the china - u. s. interest rate spread has continued to be relatively high. letting the market play a decisive role in the formation of exchange rates, we have maintained the flexibility of the exchange rate while strengthening guidance of expectations and taking firm steps to prevent the risks of exchange rate overshooting. through sustained effort over the years, china's foreign exchange market has achieved substantial progress and development, with market participants becoming more mature and transacting in a more rational manner. an increasing number of business entities are using the tools for exchange rate risk hedging. moreover, as the rmb cross - border receipts and payments now account for 30 percent of trade in goods, the exposure of enterprises to currency exchange risks has been reduced. we are also more experienced in coping with foreign exchange market fluctuations. as major economies are gradually reversing their monetary policies this year and the dollar appreciation is weakening, the difference between the monetary policy cycles at home and abroad is narrowing. these factors combined will help keep the rmb exchange rate basically stable and balance cross - border capital flows, thereby gaining more space for china's monetary policy maneuvers. looking ahead, while undergoing continued recovery, the chinese economy is still confronted with some challenges, mainly in that the effective demand is still insufficient ; there are blockages to domestic economic circulation, and the complexity, severity, and uncertainty of the external environment have risen significantly. adhering to an accommodative monetary policy stance, we will strengthen counter - cyclical and