the role of the monetary policy committee to navigate the right settings for monetary policy to achieve our mandate for low and stable inflation and contributing to maximum sustainable employment. this is our best contribution to the ultimate purpose of the reserve bank, which is to enable prosperity and wellbeing of all new zealanders : toitu te ohanga, toitu te oranga. along the way, we need to steer our way through uncertainties and threats to our mandate from the evolving economic environment. our least regrets approach is one tool to navigate these judgements. a least regrets approach to uncertainty : hawks, doves and the white heron ( he kotuku ) references bannister, g, finger, h, yosuke, k, siddharth, k & loukoianova, e ( 2020 ) ‘ addressing the pandemic ’ s medium - term fallout in australia and new zealand ’, imf working paper, 2020 / 272. brainard, w ( 1967 ) ‘ uncertainty and the effectiveness of policy ’, american economic review, 57 ( 2 ), pp 411 - 25. caggiano, e castelnuovo and g nodari ( 2018 ) ‘ risk management - driven policy rate gap ’, economics letters, 171, pp 235 - 238. conway, p ( 2000 ) ‘ monetary policy in an uncertain world ’, reserve bank of new zealand bulletin, 63 : 3, pp 5 - 15. evans, c, gourio, f, fisher, j., & krane, s ( 2015 ) ‘ risk management for monetary policy near the zero lower bound ’ brookings papers on economic activity, spring 2015, pp. 141 - 219. evans, c ( 2019 ) ‘ on risk management in monetary policy ’, federal reserve bank of chicago speech. ferrero g, pietrunti, m & tiseno, a ( 2019 ) ‘ benefits of gradualism or costs of inaction? monetary policy in times of uncertainty ’, bank of italy temi di discussione, 1205. greenspan, a ( 2004 ) ‘ risk and uncertainty in monetary policy ’, federal reserve board speech. hawkesby, c ( 2020 ) ‘ covid - 19 and the reserve bank ’ s balance sheet ’, reserve bank of new zealand speech, delivered on 20 august. kaminska, i ( 2014 ) ‘ what ’ s with the doves and hawks ’, video published by the financial times, available at http : / / www.

quiet successes over the last few years in developing an advanced and robust interbank payment and settlement system or in stimulating the development of a local debt market. the hong kong method is for such projects to be done, where possible, as partnerships between government and private sector, with a heavy emphasis on private sector involvement. nevertheless, the role of government is essential in getting them off the ground and in mobilising resources that cannot always be easily provided by the private sector. 18. secondly, the government provides regulation and protection. this ranges from the highly visible, and currently much debated, rule of law, which is the ultimate guarantee of contracts between individuals, to the day - to - day regulation of the markets themselves. much of the activity in this area is also left to the private sector : only a small proportion of contracts are ever disputed in the public courts, and a large part of the regulation of the markets and the professions is self - regulation. once again, however, government involvement is of key importance. the government is there in the background as the last resort when conflicts arise, and, in consultation with market practitioners, it takes the initiative to reform regulatory systems when new conditions require it : the far - reaching reforms proposed for hong kong ’ s securities and futures markets in the recent budget are a good example of this. 19. finally, the government is prepared to intervene in isolated, clearly identified cases where markets appear to be malfunctioning. in this respect, the hong kong monetary authority has a special role to play within the financial sphere. one of its primary tasks is to promote the stability and integrity of hong kong ’ s financial system, and one of its tools – in addition to the linked exchange rate, banking regulation, and the financial infrastructure – is the exchange fund, our official reserves. the exchange fund, among other things, is available to be drawn on to maintain the stability and the integrity of the monetary and financial systems of hong kong. this is done rarely and sparingly, but it is necessary to have this provision for reasons that should be readily apparent. in addition to being a free market, hong kong is also an open market. this gives it one of its main strengths as an economy, for our links with overseas markets are a vital part of our success as a financial and commercial centre. but it also renders hong kong exposed, and therefore vulnerable, to economic and other forces that are entirely beyond its control. we would not have it any other way,