see how technological innovation can improve the functionality of money. we invited the industry last year to explore potential applications for an e - hkd, a new form of digital money. the first phase of the e - hkd pilot programme had attracted enthusiastic responses, and we will continue to experiment with the industry on different innovative use cases in the next phase that we have launched last month. we observed that tokenisation, alongside programmability, had the potential to transform how money could better serve our financial needs, and that it could create new opportunities for consumers and businesses to transact in new spaces and new ways. these can potentially unlock new avenues for wider inter - industry settlements, facilitate financial inclusion, enable seamless cross - border transactions, and enhance the efficiency of capital markets. the topics of tokenisation and programmability have since reverberated throughout the industry, with pilot participants proactively sharing their insights, designs and frameworks on how a digital money ecosystem could look like in future, which could encompass retail and wholesale cbdcs in co - existence with other forms of money issued by private firms. and by " digital money ", i intend to also cover different types of tokenised money, capable of supporting the settlement of tokenised assets and transactions. publicly and privately - issued money with this future monetary system, a key question to consider is what role central banks should play in providing " digital money " to the public, like individuals and corporates. in fact, some research studies show that over 90 % of money used in modern economies is private money, issued digitally by private entities like commercial banks. digital money should be designed with public interest in mind. any digital money should enable fast, convenient, seamless, and around - the - clock transactions between consumers and businesses. over the last decade, we have observed digital money move beyond isolated systems and pure accounting ledgers in banking. what was once confined to basic units of transfer has evolved into something far more sophisticated and powerful, enabling end - to - end integration with different industries. we envision this close - knit relationship between the public and private money to continue. it goes without saying that the interplay between public and private money is crucial in this regard, especially if we are to realise the full benefits of tokenisation, as well as the full potential of cbdcs and other forms of digital money. just as cash and deposits exist harmoniously today, the tokenisation of our financial system will likely involve a complementary relationship

##tion targets. in addition, the economy was buffeted by shocks that had not been seen before. for example, the economy was hit by adverse oil - price shocks that fed directly into inflation expectations in the absence of a clear nominal anchor for monetary policy. and these shocks, combined with other structural changes, made it difficult for workers and employers to judge how to respond. for an overview of the causes of inflation, as well as the goals of the aib, see dodge ( 1976 ). lipsey ( 1977 ). auld et al ( 1979 ). thiessen ( 2000 ). in other words, the interest rate elasticity of m1 demand was too high. in the second half of the 1970s, the nominal anchor for monetary policy was a series of target ranges for growth in m1. these were abandoned in the early 1980s as the relationship between movements in the narrow money aggregate and changes in nominal spending broke down. another problem with using the monetary aggregate m1 as the target for monetary policy was the uncertain impact of financial innovation, which weakened the relationship between m1 and other macroeconomic variables. crow ( 1988 ). these targets were aimed at gradually bringing the 12 - month rate of inflation down to 2 per cent, the midpoint of the inflation - control target range, by december 1995. given the empirical evidence for canada, which showed that the appropriate horizon for aiming at an inflation target was about 1½ to 2 years, the first formal target was set for december 1992 at a rate of 3 per cent ( plus or minus 1 per cent ). since that initial agreement, the inflation target has been extended three times, with the latest agreement covering the period to the end of 2006. in each case, the midpoint of the inflation - control target range has been maintained at 2 per cent. the measure of prices chosen for the target was the consumer price index ( cpi ). this index is well understood by workers, unions, and employers, partly because of its use in cost - of - living ( cola ) agreements. the operational guide for the bank, however, is core inflation. 10 the reason for using a core inflation measure is to focus on the underlying trend in inflation on which monetary policy can have an effect. given the lags between monetary policy actions and their impact on inflation, shocks that are expected to dissipate within that time frame are generally outside the scope of central bank action, unless such shocks have an impact on inflation expectations. since the adoption of inflation targeting,