a currency board with a fixed rate against the us dollar. i have recently written and spoken at some length on the rationale behind this choice and do not intend to repeat all of that today. but let me just reiterate one of my principal contentions – namely that monetary policy, which includes exchange rate policy, cannot determine an economy's competitiveness outside the relatively short term. competitiveness is determined by the intrinsic efficiency of the economy, which is in turn the result of investment, productivity, structural evolution, and so on ; these may in turn be amenable to influence by government policy in various fields, but the role of monetary policy is to provide a stable monetary environment within which those longer - term forces can operate most propitiously, and not itself to attempt short - term fine - tuning. there is one further aspect of this debate which i should like to address, since it seems to be the focus of increasing attention. it is the issue of what should or should not be done with the hong kong dollar, were the renminbi to move more flexibly against the us dollar, and, more particularly, whether we should consider pegging the hong kong dollar to the renminbi. adjustment of competitiveness prices in hong kong are observed to be flexible in both directions in response to market forces. one of these forces is the influence of competing prices from the mainland ; our research indicates that there is a gradual process of convergence at work ( which includes rises in prices across the border as well as falls in hong kong ), although this may be weaker than some observers claim and certainly does not mean that prices will or should eventually equalise completely. moreover, prices of tradables in hong kong are found to be particularly adept at adjusting to movements in the effective exchange rate. in other words, if our prices become misaligned against foreign prices because of some movement in exchange rates ( such as by the us dollar moving against other major currencies and pulling the hong kong dollar with it ), hong kong prices are quick to adjust in order to restore competitive equilibrium. at the same time, it appears that prices in the mainland are, by international standards, also quite flexible. two conclusions can be drawn from these observations. one is that prices between hong kong and the mainland are well able to adjust relative to one another without any assistance from the exchange rate. the other is that, if the exchange rate were to move around and create disequilibria between prices

system has made quantum leaps, with a remarkable daily turnover of rmb1. 6 trillion, surpassing that of hong kong dollar. 1 / 3 bis - central bankers'speeches hong kong also handles over 70 % of global rmb payments and ranks number one globally in rmb foreign exchange transaction volume. another bright spot is capital market activities involving rmb. each day northbound and southbound stock connect records close to rmb 140 billion worth of transactions, and northbound bond connect records rmb 40 billion. southbound bond connect has also added impetus to dim sum bond issuance and trading in hong kong. last year the issuance of dim sum bonds totalled rmb 330 billion, hitting an eight - year high. we are excited to see continued breakthroughs and expansion of product offerings denominated in rmb. a few weeks ago swap connect was launched, opening up a new avenue for investors to manage interest rate risks associated with their rmb bond holdings. just last week, the government green bond programme successfully issued a record rmb15 billion of green bonds and extended the tenor from previous five years to ten years. in two weeks'time, hong kong dollar and rmb dual - counter trading of selected hong kong - listed stocks will commence. all these positive developments have contributed to the increasing onshore - offshore circulation of rmb and more offshore - to - offshore activities. looking ahead, china's continued economic growth, its strength in external trade activities and its expanding financial markets lay solid foundation for rmb to further increase its international footprint. rmb's usage in cross - border trade settlement, global foreign exchange transactions, international payments, and official reserves has ample potential to further increase. the future path will be guided by two themes. first is to promote rmb internationalisation in an orderly manner. second is that financial development should serve the real sector in high - quality economic development. against this backdrop, there are two issues to be addressed : how can rmb internationalisation benefit market entities and real sector activities, capturing the opportunities offered by the " belt and road initiative " ; how should hong kong leverage its competitive edge to support the process? the merchandise trade volume between the mainland and some 150 countries along the belt and road reached rmb14 trillion last year, while the scale of two - way investment has also been expanding steadily. this provides fertile ground for the growth of rmb usage in trade and investment activities. for mainland corporates, using local currency in external transactions helps reduce currency mis