eddie yue : remarks at media standup remarks by mr eddie yue, chief executive of the hong kong monetary authority, at media standup, hong kong, 2 october 2019. * * * ladies and gentlemen, 1. today is my first working day as the chief executive of the hkma. apart from the transition to a new position, i will also be faced with a challenging external and domestic environment. this includes the weakening of global economic momentum, uncertainties over the chinaus trade conflict and brexit, unpredictable monetary policy stance across central banks especially in the us, and the social events in hong kong in recent months. all these have presented huge challenges and uncertainties for the hong kong economy. 2. our key priority in the next few years is to maintain hong kong ’ s monetary and financial stability. 3. and, the foundation for this stability is the linked exchange rate system ( “ the link ” ), which has helped hong kong weather different financial storms since 1983. i ’ ve been involved in the operation of the link throughout my career in the hkma and i have also gone through two financial crises. i firmly believe that the link is the most appropriate monetary system for hong kong. we see no need and have no intention of changing this well - established system. 4. our banking system is also robust and sound. i ’ m confident that hong kong ’ s financial system is well positioned to cope with market volatilities. 5. we will also reinforce hong kong ’ s role as a premier international financial centre. one key driver is the rapid development of fintech. while the hkma has done a great deal in the past few years in promoting fintech, there is still room to further apply new technology in finance in the coming years. this includes, for example, fostering a better ecosystem for regulatory technology ( or regtech ) and supervisory technology ( or suptech ). we are also aware that any new risks associated with the increasing use of technology have to be managed. these include for example cyber and data security. we will work with the industry to address these risks. 6. we are also committed to promoting market development opportunities, especially in strengthening the role of hong kong as the gateway to the mainland ’ s capital markets, in the greater bay area development, and also in green finance. 7. these are rough times. but my colleagues and i will continue to discharge our duties in a professional manner and do our best to serve the people of hong

especially in the face of persistent shocks. our ongoing analysis of household responses to high inflation and income variability ( lydon ( 2022 ), arrigoni et al. ( 2022 ), adhikari ( 2022 ) ) as well as to interest rate rises ( lyons et al ( 2022, fsr 1, box c ) ) will continue to highlight groups that are most vulnerable, allowing for appropriately target measures to be implemented. next, i want to move onto price stability and monetary policy, and how this interacts with inequality. price stability, monetary policy and inequality though central banks actions can have an impact on the distribution of wealth and income over shorter horizons, over the longer run their impact is likely to be small. as a tool that is primarily aimed at tackling cyclical fluctuations, monetary policy is unlikely to be a substantial driver of structural inequality. we know that downturns can lay bare the different types of inequality that are lurking beneath – as i mentioned above – but, the sources of inequality run deeper and, i believe, are more structural in nature than they are cyclical. but this does not mean that, as monetary policy makers, we should ignore it. this was one of the key messages we heard from the general public and representative groups when we conducted our own ‘ listening exercises ’ as part of the ecb ’ s 2021 strategy review. to the extent that monetary policy has significant redistributive effects, it will of course impact inequality, at least in the short term. but an equally – if not more – important issue is how inequality can also impact monetary policy. in other words, how pre - existing levels of inequality – either in income and / or wealth – impact how monetary policy is transmitted to households, firms and overall economic activity. there has been an explosion of research on this issue in recent years. 10 much of it focuses on the how monetary policy changes – for example, increasing or decreasing interest rates, or purchasing assets – affects different types of households according to income, job - type or wealth. when i talk about ‘ conventional ’ monetary policy, if there are more households in society whose consumption is very sensitive to income changes – typically those with limited access to credit, or fewer savings – then the transmission of monetary policy to the real economy tends to be stronger. our recent central bank quarterly bulletin article on “ household economic resilience ”, emphasised this issue by quantifying for the first time the joint distribution