hkma has also required banks to standardise the maximum ltv ratio of mortgage loans for all standalone carpark spaces at 40 % and the maximum loan tenor at 15 years. other requirements on maximum ltv ratio and debt - servicing ratio applicable to commercial and industrial property mortgage loans also apply to standalone carpark space mortgage loans. the above measures take effect immediately. however, loan applications in respect of property transactions with provisional sale and purchase agreements signed today or earlier will not be affected. the hkma is also aware that the risk weight allocated by hong kong banks adopting the internal ratings - based ( irb ) approach under the basel capital accord to residential property exposures is at a relatively low level. this may not fully reflect the existing and future risks of property market volatility. to further enhance the risk management of banks in hong kong, the hkma has decided to introduce a risk weight floor of 15 % for residential mortgages approved by banks on or after 23 february 2013 under the irb approach. mr arthur yuen, deputy chief executive of the hkma, will explain the above - mentioned measures in more details later. bis central bankers ’ speeches meanwhile, the hong kong mortgage corporation will introduce revisions to its mortgage insurance programme in line with the latest developments in the property market and will announce the details later. i hope the public would understand that hong kong is facing an extremely unusual macromonetary environment. the ongoing quantitative easing by advanced economies is unprecedented in both scale and duration. interest rates have been artificially maintained at extremely low levels, and we see huge volumes of liquidity flow into emerging markets like hong kong. the current unusual circumstances are one of the main drivers for the prolonged boom in the local property sector. the risk of over - heating in the property sector to financial stability in hong kong is no smaller than that seen in 1997. we should note in particular that while mortgage rates were generally over 10 % in 1997, after the burst of the property bubble, us interest rates have fallen, and mortgage rates in hong kong have spiralled down reaching about 2 % in 2004. the situation we faced now is just the opposite. mortgage rates are around 2 %. and, even if the low interest rate environment were to remain until 2015 as anticipated by the us federal reserve, the us interest rates are bound to head back to more normal levels. will mortgage borrowers in hong kong then be able to withstand the impact of interest rate hikes and property price falls? for example, under

making available sme financing at reasonable cost is therefore crucial to the growth of this important sector. providing policy loans directly to smes helps, but the assistance is limited relative to the enormous financing needs and there are always concerns about economic distortions and the efficient use of public resources. to achieve greater and more sustainable sme financing, it is necessary to develop market - based approaches which are commercially viable to mobilise private sector investment into the sme sector. i encourage the adb to further work on this front, including exploring possible mechanisms such as credit enhancement and securitisation. scaling up private sector lending would require a change in the skill mix of the adb, in particular in strengthening its market expertise and risk management. partnering with domestic agencies and private sector financial institutions, other international financial institutions and developed members in the region that have relevant experience would be useful in utilising their expertise, building the capacity of the bank, and sharing credit risk. there are, of course, other important areas concerning the development of the region where the adb could play a meaningful role as identified in the new long - term strategic framework. as a member of the bank and the region, we stand ready to provide support and look forward to strengthening our cooperation with the adb in furthering the development agenda of the region. and lastly, to successfully implement strategy 2020, further enhancing the organisational effectiveness of the adb will be of critical importance. we welcome the bank ’ s commitment to develop a more robust results framework and to continue its institutional reforms, and we look forward to ongoing efforts by the bank in this regard. thank you.