eddie yue : new and important frontiers of financial development reached in 2017 welcome remarks by mr eddie yue, deputy chief executive of the hong kong monetary authority, at the hong kong - london financial services forum 2017, hong kong, 18 december 2017. * * * opening richard, distinguished guests, ladies and gentlemen, good afternoon. i would like to welcome you all to the hong kong - london financial services forum 2017, especially our guests travelling from london. this is already the seventh forum since the first hong kong - london rmb forum convened back in 2012. the forum has proved to be an effective platform for the private sectors in the two places to collaborate and promote the use of rmb in the international markets as well as to grasp the associated business opportunities. last year, london and hong kong decided to broaden the scope of the forum to cover not only rmb business but also other new and important frontiers of financial development including infrastructure financing, the belt and road ( b & r ) initiative, green finance, as well as fintech. looking back, it was a good move. as 2017 is drawing to a close, i think most of you would agree that b & r and fintech are the two hottest buzzwords in the financial services sector this year. rmb internationalisation but that is not saying offshore rmb business has been all quiet in the past year. on the contrary, 2017 witnesses important milestones in mainland china ’ s capital account liberalisation. since the start of the year, there have been signs of stabilisation in the offshore rmb liquidity pool in hong kong, now hovering at around rmb 600 billion. on the other hand, our rmb rtgs system continues to record a high volume of turnover of some rmb 900 billion per day, indicating that a large amount of rmb financial intermediation activities have been taking place in hong kong. july this year, the hkma and the people ’ s bank of china jointly launched the bond connect. it provides an additional channel for international investors to gain access to the vast bond market in mainland china, using international common practice in securities settlement and custody. this is made possible thanks to new infrastructure linkages between hkma ’ s central moneymarkets unit and relevant onshore institutions. so far, over 200 investors have successfully registered as bond connect investors, holding some rmb80 billion mainland bonds. daily turnover averaged rmb2 billion per day. this is not bad in four months ’ time, but we

the central bank and the public in general, and the financial markets in particular, and constitutes an important mechanism of control over the central bank, its management and its policies. it enables the central bank to stay attuned to public criticism, and it enables the public to better understand the functions, policy, decisions and achievements of the central bank. the two subjects i have spoken about so far, central bank independence and the requirement for transparency and accountability incumbent on the central bank lead me to my main subject this evening. 3. the new law for the bank of israel the current bank of israel law dates back to 1954, and is not appropriate either to the current reality of israel ’ s modern economy, or to the global economy. although amendments have been introduced into the law that grant the bank of israel a greater measure of independence, in particular the “ no printing law ”, the bank ’ s de jure independence is more restricted than its de facto independence. it is therefore important to bridge the gap by passing a new law that will provide a proper legal basis for the reality that has been created. the new law will clearly define the independence of the bank, its goals, and the mechanisms for decision making, and should impose on the bank a comprehensive framework of transparency and accountability. the new law should thus contain the correct mixture of independence, transparency and control mechanisms for the bank of israel, according to the generally accepted standards in the advanced economies. in my first few months as governor of the bank we cooperated with the ministry of finance, the prime minister ’ s office and the ministry of justice in producing a bill. we made good progress, but decided to shelve the matter until a new bank of israel wage agreement was reached, and that took longer than we had anticipated. we are now reverting to this issue, and i hope that we will soon have a final version. a. independence the new law will give the bank of israel instrumental independence, i. e., independence in making the decisions on the interest rate as needed to perform its functions and reach its goals. and as i stated above, this independence must also be reflected in the management of the bank. b. defining the targets the new law should clearly define the bank of israel ’ s targets, along the lines of the targets of other modern central banks. the modern approach, and that adopted in the major central banks such as the bank of england and the ecb, generally define three targets, and determines their