. there was undoubtedly also political interference in banks, in terms of both policy lending and pressure on supervisors not to take action against well - connected owners of banks. another fundamental problem was weakness in the infrastructure of business laws that made it difficult for banks to take and realize collateral and to put insolvent companies into liquidation. we must also bear in mind the fact that the ultimate responsibility for poor lending and risk management practices must rest with the management of the banks themselves. however, having said all this, there have undoubtedly been failures in supervisory policies and practices, as demonstrated by the reform measures that are now being put in place in a number of countries. the basle core principles 13. reform is not an easy task. but at least supervisors in individual countries are now in a position to tap into an international network of technical cooperation and assistance to help them to bring their systems up to scratch. at the centre of this international effort is the basle committee on banking supervision which is taking on a leadership role in devising supervisory standards that can apply to all countries and not just the g - 10 countries which sit on the committee. in particular, the committee has produced a set of core principles that are intended to provide a set of minimum requirements for effective banking supervision. supervisory authorities around the world are being encouraged to endorse the core principles and to implement them as quickly as possible. the imf will have a role to play in checking that countries are indeed taking serious steps in this direction. 14. the core principles are not earth shattering. they have not unveiled some new secret of how to supervise banks. all they do is to summarize what are generally agreed to be the fundamentals of a sound system of supervision. this includes the following main elements : [UNK] • clear responsibilities and objectives for the supervisor set out in a suitable legal framework • operational independence for the supervisor and the necessary resources to do the job • a proper licensing regime for banks • sound prudential regulations and requirements that address the main types of risk faced by banks • the means to enforce supervisory requirements and gather information through on - site examination and off - site review • the power to take action against problem banks, including closure • the ability to conduct consolidated supervision and to cooperate and exchange information with other supervisors at home and abroad 15. these may seem like statements of the obvious. but the necessary measures were evidently not fully in place in a number of countries in the region. reforms are now being implemented, in some cases with the

##dc. 1 / 3 bis - central bankers'speeches e - hkd pilot programme today's event marks the commencement of the e - hkd pilot programme, which is a key component under rail 2. it is a tremendous opportunity for the hkma to work with the industry to consider different use cases and design choices, and co - create new payment functionalities and infrastructures that could add value to society. we look forward to this public - private partnership in shaping the future of money in hong kong. we will follow an iterative process for the pilot programme. each iteration will last for about a year and it will help enrich our perspective and refine our approach to a possible implementation of e - hkd. given the already vibrant retail payment landscape in hong kong, we understand clearly that the decision to implement e - hkd would very much depend on whether it can make payment more efficient and convenient than the existing payment methods and whether it can unlock new business opportunities. this is why the experiences from the pilot programme would be crucial in informing our policy decision. selected pilot programme participants i am very excited to see that the pilot programme has attracted immense industry interest. 16 companies have been selected to participate in the first batch of the pilot programme for 2023. these participants, some in groups, will work on 14 pilots which will span across six major categories, covering programmable payments, " dual offline " payments, and other new developments with the use of blockchain technology, such as settling web3 transactions and tokenised assets. these innovative use cases proposed by the industry truly open our eyes to new possibilities of what central bank money can do, and how e - hkd can potentially benefit the general public and businesses in hong kong. we will invite selected participants to come on stage shortly to give a brief overview of their proposed use cases. we also aim to share the key learnings of the pilot programme at the hong kong fintech week in november this year. i trust that the outcomes and insights gained from each of the above pilots should help enrich our perspective and refine our focus and priority of the pilot programme in subsequent years. cbdc expert group besides the pilot programme, the hkma is also fostering closer government - industryacademia collaboration on cbdc research. we plan to form a cbdc expert group to bring together leading professors from local universities, who will come from different fields, such as computer science, business and law. i am glad to tell you