other front that we have been working on is the replication of our hong kong dollar financial infrastructure for the us dollar, the popular currency for international financial intermediation. we have late last year completed this for the debt clearing system and the rtgs payment system. we have linked these to the corresponding systems in the hong kong dollar financial infrastructure. i won ’ t bore you with the technical details. what this means is that we now have, in this time zone, a robust financial infrastructure for us dollar transactions that can accommodate, among other things, a us dollar bond market in this region. you do not have to wait until new york opens before you can achieve finality of settlement of your us dollar transactions in bonds or, indeed, in any us dollar denominated financial assets, if they are lodged with our cmu in hong kong. furthermore, any asian currency with an rtgs payment system, if it is linked up with our system, will be able to achieve pvp or payment versus payment for the two currencies in real time. we already have pvp for hong kong dollar versus us dollar transactions the first in the world. i have, as you are probably aware, drifted into the positioning of the hong kong bond market for meeting future challenges. we have, through our efforts in the development of the financial infrastructure, put ourselves in a position to play the ideal host to the bond market of the region, or of this time zone. i hope members of our financial community can leverage on this position of strength and bring issuers and investors of us dollar bonds to hong kong. further development of the bond market is largely in their hands. as central banking officials, we in the hong kong monetary authority have done what we can appropriately do, in the provision of this public good a robust financial infrastructure. we can, of course, replicate this financial infrastructure for other currencies, and indeed we are currently exploring the possibility of doing so for the other major international currency not domiciled in this time zone the euro. and if this is appropriate, we can also transfer our technology to others through our advisory services. i am, in particular, thinking of the rmb financial infrastructure, which in my opinion requires urgent strengthening, not just for facilitating the development of the rmb bond market, but also for facilitating the many further measures in financial liberalisation following wto accession. meanwhile, our us dollar financial infrastructure in hong kong, coupled with the market making arrangements that have been well

joseph yam : developing and positioning hong kong ’ s bond market speech by mr joseph yam, chief executive of the hong kong monetary authority, at the forum on china ’ s government securities market in the new century, hong kong, 19 november 2001. * * * introduction it is a great pleasure for me to be here today to share with you hong kong ’ s experience in the development of the bond market and our views on the future prospects of that market. before i go into the subject, however, i would like to congratulate our friends from the mainland on their superb efforts leading to china ’ s accession to the world trade organisation. the signing of the necessary documents a week or so ago marks the successful conclusion of 15 years of sheer hard work and determination, and the beginning of a new era in which the mainland embraces globalisation in earnest, to the long - term benefit of china, the region and the world. i have no doubt that hong kong, in particular, will benefit tremendously from this. the international business community has been positioning itself, here in hong kong a free and open economy at the doorstep of the mainland and an integral part of china to take advantage of the many opportunities that will open up in the years to come. as the international financial centre of china, hong kong is particularly looking forward to the opportunities arising from a much quicker pace of financial liberalisation in the mainland after accession to wto. put simply, notwithstanding the gloom of global recession, the future of hong kong is bright. bond market development let me turn quickly now to bond market development. there are a few points that i would like to make immediately. the first point is a basic and obvious one, so obvious that it is often overlooked. this is that the bond market is a channel of financial intermediation for the purpose of mobilising savings into productive investment that promotes economic growth and development. there is a need for those involved in the bond market those responsible for its development and those making a profit or a living from it to be frequently reminded of this basic purpose. this is particularly so when considering the introduction of sophisticated products derivatives and the like. i have nothing against sophisticated financial engineering, or against the engineers being well remunerated, provided that the regulators and the market participants, both at the wholesale and retail levels, are capable of appreciating and coping with the associated risks. this may not often be the case. it is possible that, while these products theoretically