quickly via the interest - rate channel, which is fundamentally welcome from the point of view of the central bank. nevertheless, this will bring about changes to the established mechanisms of the transmission process, which might - at least for a time - give rise to certain problems of interpretation for monetary policy. furthermore, the increasing securitisation of assets means that greater attention will have to be given to the impact of central bank policy on the capital market rate and its implication for the real sector. but we shall probably have to adjust to the fact that the increasing growth and use of the internet is opening up new possibilities in the financial sector which are not without risk from the point of view of the central banks. the growing use of e - money in payments may, at times, lead to some problems of data interpretation. as long as flows of e - money are dominated by domestic banks, however, this will not result in any lasting impairment of monetary policy, since we possess the instrument of - by all means, remunerable - minimum reserves. at all events, the existence of minimum reserves ensures that broader monetary aggregates remain closely related to the provision of central bank money. consequently, it will be important to create the statutory framework for making all enterprises wishing to issue e - money subject to banking supervision and minimum reserve requirements. the situation would be somewhat different if, say, residents were to use money supplied by a non - resident issuer for domestic transactions on a significant scale. this might loosen the relationship between the national money stock and the domestic transaction volume and cause the money stock indicators to lose some of their informative value. on the other hand, the processing of payments abroad harbours new risks for the market players - risks that make a sharp growth in such arrangements appear, if anything, unlikely on account of differences in the legal frameworks for the guaranteeing of deposits, for example. thus, it can hardly be assumed that the emerging changes will descend on us abruptly without us being able to respond. the volume of e - money issued is, at all events, still very small at present. 2 in summary i would like to reiterate three points : 1. there is now a worldwide consensus that monetary policy - as independent as possible of political influence - should be committed primarily to the objective of price stability. the experience of the industrial countries in the 1960s and 1970s, at least, showed that an in april, electronic money accounted for no more than 0. 05 % of the currency

resident corporations and financial institutions deciding that the rmb served them well as a unit of account, means of payment and store of value for their international transactions. i ’ m not sure any of us are in a position to predict if and when this will happen. however, i feel that we can say with some confidence that the landscape of the offshore rmb market will change in two respects. first, we are likely to see the increasing maturity of the offshore rmb market, both in terms of the depth and breadth of the market and the efficiency of price - setting and allocation of rmb funds. in more granular terms, this means we will see an expansion and greater diversity of rmb financial activities : up till now, the intermediation of rmb funds has been primarily about placement of bank deposits by personal and corporate customers. in future, it will move more towards issuance and investment of bonds and a wider range of other financial instrument and products. at the same time, i would expect that in future there will be more active borrowing and lending of rmb funds among banks. if so, this would lead to the emergence of a rmb interbank funding market. in addition, i would expect to see increased rmb trading in the forex market, which in turn should lead to the development of more sophisticated instruments. the second change to offshore rmb markets we can confidently expect is the further development and strengthening of links with the onshore rmb market. as a critical piece of infrastructure that supports the internationalisation of rmb, the offshore rmb market cannot operate in isolation. given continued liberalisation of cross - border rmb transactions by the mainland authorities, we will see more and wider channels for the flow of rmb between the onshore and offshore rmb markets. this will be critical for the sustainable development of the offshore rmb market and, thus, the future role of hong kong. role of hong kong and this brings me now to my third point, the development of hong kong as the offshore rmb business centre. let me start by saying that hong kong ’ s role is not an accident or a result of chance. it stems from our city ’ s historical and indispensable role facilitating the opening up of the mainland economy. since china ’ s liberalisation and reform began three decades ago, hong kong has served as the global gateway for trade and investment with the mainland. even to this day, hong kong still intermediates some 30 % of the