howard lee : opening remarks - asia climate investment seminar opening remarks by mr howard lee, deputy chief executive of the hong kong monetary authority, at the asia climate investment seminar, hong kong, 11 november 2024. * * * good morning ladies and gentlemen : i am delighted to announce a strategic partnership in asia climate investments between the hong kong monetary authority, the asian infrastructure investment bank, the asian development bank, and the international finance corporation. this collaboration marks another significant milestone in our collaborative efforts to address the pressing issue of climate change in asia. the significance of climate investments in asia climate change is a paramount challenge of our era, with asia playing an important role in combating this global challenge. accounting for half of the world's greenhouse gas emissions, asia's dense population and geographical risks to extreme weather require immediate action to increase combat these challenges. regarding investments, the hkma has set a net - zero emissions target by 2050 for the investment portfolio of the exchange fund. we have also been directing resources and capital towards climate investments across different asset classes globally, which is an important component of our strategy to help reduce greenhouse gas emissions while making commercial returns. across the different regions, we believe that asia's rapidly growing economies require significant investments in sustainable energy solutions and decarbonisation. strategic partnership between hkma, aiib, adb, ifc while the hkma has been proactively investing more in asia climate investments, we also recognise that we cannot do this by ourselves. addressing climate change demands sustained dedication and collective effort over an extended period. by working together, we can pool our knowledge, expertise, resources, and networks to support the development of low - carbon infrastructure projects that benefit both the environment and the economy. by collaborating with like - minded institutions and private sector partners, we can amplify our impact and create a more sustainable future for the region. in this context, the hkma, aiib, adb and ifc collectively acknowledge the importance of collaborating to seize the climate opportunities in asia, focusing on making investments that will strive to meet our respective net - zero targets. the strategic partnership aims to set an example, calling on all stakeholders to join forces in addressing climate change. 1 / 2 bis - central bankers'speeches for instance, the hkma, together with aiib, adb and ifc, are investors in the actis asia energy transition fund, which is one of the earliest collaborative investments made under this strategic partnership. we believe that

the efficiency arising from technological advances. in this context, the knowledge of the linkages between monetary policy and financial stability is of particular importance. at the same time, we need to understand thoroughly how macro - prudential regulation and supervision interact with monetary policy. in particular, we need to understand how systemic risk and policies put in place to mitigate it may affect the transmission of monetary policy. i will first recall the market and policy failures brought to the surface by the crisis and argue that we need to address the fundamental causes of these failures. i will then describe what we know about the interaction between prudential regulation and supervision and monetary policy. at the same time, i will emphasise those mechanisms that are still less known. finally, i will suggest a way to proceed and to explore the new road lying ahead. lessons we have learned from the crisis before taking a new path, it is good to know exactly where we are and how we got there. so in order to define more clearly our possible upcoming tasks and challenges, let me first start by recalling briefly the sources and the amplification mechanisms of the recent financial crisis. ultimately the crisis was a combination of the accumulation of major imbalances in the years running up to the crisis with the incentives provided by the existing regulatory framework. low inflation, low interest rates and abundant liquidity prior to the crisis were conducive to an excessive accumulation of risk. banks and other investors had increased their appetite for risk and engaged in a “ search for yield ” supported by the exponential growth of complex and opaque financial products. the excessive risk - taking was also encouraged by the inadequate corporate governance of financial intermediaries and by regulations that did not keep up with the technological advances, also due to the emergence of a shadow banking system which was largely unregulated. when the crisis was triggered by the drop in the value of certain structured products, it quickly spread through interbank linkages, transforming it into a system - wide financial and economic crisis. in my view, the general lessons learnt from this experience are the following : first, the financial crisis has reminded us how important it is to look at the links and connections of the financial system. we saw that major disruptions such as the failure or near - failure of certain institutions rapidly spilled over to the whole financial system. therefore, the systemic nature of individual institution ’ s risk - taking has been largely underestimated. the consequences of this must be that macro - prudential