efforts to develop the bond markets. at the national level, initiatives such as consolidation of issuance in a few benchmark maturities and development of interdealer markets have helped increase liquidity and improve reliability of yield curves in a number of jurisdictions. meanwhile, collaborative efforts are being made in regional forums. a notable example is asean + 3 ’ s asian bond markets initiative with the strong support from adb. the initiative has been looking into both demand and supply side issues pertinent to the development of the bond markets. under the initiative, a credit guarantee and investment facility has been set up as a trust fund of adb to provide credit guarantee to allow investment - rated issuers to issue local currency bonds in asean + 3 markets. another good example is the asian bond fund project of the executives ’ meeting of east asia - pacific central banks ( emeap ). the launch of the abf funds introduced to the region ’ s bond markets a new low - cost and efficient product in the form of passively - managed index bond funds and helped catalyse infrastructure, tax and regulatory reforms at both the regional and domestic levels. the hong kong monetary authority took an active part in the design and implementation of the project. these efforts, along with the rapid economic growth and improved investment climate, have contributed to considerable growth in the local currency bond markets. according to adb, the bis central bankers ’ speeches amount of local currency bonds outstanding in emerging east asia increased by more than ten folds from us $ 528 billion prior to the asian financial crisis in 1996 to us $ 5, 479 billion in 2011. we have also seen the interesting development of offshore bond markets. in hong kong, the rmb bond market has grown substantially since the first issuance in 2007, with total issuance increased to over rmb 100 billion in 2011 from rmb 10 billion in 2007. the range of issuers has also diversified, from predominantly the sovereign and banks in china to multinational companies and international financial institutions. among the latter, adb was the first to issue rmb bond in hong kong in october 2010. a number of multilateral agencies also issued rmb bonds in hong kong after adb ’ s debut issue. with the rapid growth of china ’ s cross - border trade and investment flows, the offshore rmb bond market would provide a useful financing platform and facilitate the greater use of rmb in these transactions, thereby minimising the currency risk associated with the use of a third

transactions in the offshore markets. 7. as i said earlier, the pace of the development of offshore rmb business and markets also crucially depends on the third factor, that is the role that the private sector can and should play in the process. it is not likely that a market can thrive just with policy headroom and financial infrastructure. banks and other financial institutions must develop their capability to satisfy their customers who have a need or an interest in using rmb. trading companies need trade finance in rmb. corporates investing in china need direct or indirect financing in rmb and asset owners need a variety of rmb financial products. many of them need to use instruments to manage or hedge their rmb exposures. all these rmb related financial services and products can only be developed by the markets and financial institutions because they are closest to their customers and understand their needs best. that is why it is so important for the hkma to collaborate with our official sector counterparts in australia to create this private - sector led dialogue. the first dialogue was held in sydney in april last year, which was highly successful. i am very pleased that it is hong kong ’ s turn to host the second dialogue and i am confident that it will be equally if not more successful. i note that today ’ s dialogue has a very rich agenda and i look forward to hearing useful and practical ideas and suggestions on what the private sector can do on its own or in collaboration with the official sector to further develop the offshore rmb markets in australia and hong kong. 8. thank you very much. bis central bankers ’ speeches