march, we issued two circulars to all banks in hong kong. the first one reminded them to undertake risk assessment and make preparation for the necessary transition. the second one served to clarify that genuine amendments to existing derivatives contracts which are made to give effect to interest rate benchmark reform will not be considered new contracts from the perspective of the hkma ’ s margin requirements. this removes one of the uncertainties about the transition. for the time being, we have not specified a timeline for the banks to get ready their transition plan but we will approach them at a later stage to understand their progress and readiness for the transition. hibor and honia 15. as financial institutions in hong kong are gathering pace in their preparation for the libor transition, we are also making progress in identifying an alternative reference rate for hibor. we understand market participants are keen to have forward - looking term rates to mirror the structure of hibor. therefore, the hkma conducted a feasibility study of compiling hkd term rates based on actual wholesale funding transactions by major banks. but the results showed that while transaction - based wholesale term funding rates generally followed term hibors, they exhibited a high level of daily volatility, which made them an impractical substitute for term hibors. 16. more recently, tma proposed adopting the hong kong dollar overnight index average ( honia ) as the alternative reference rate for hibor. similar to many alternate reference rates chosen in other currency areas, honia is an overnight interbank funding rate. while lacking a term structure on its own, this reference rate is robust and based purely on transaction data. 17. in early may, tma completed a consultation with the industry on several technical refinements to honia. this is part of its ongoing initiative to further enhance the robustness of its benchmarks. it is now reviewing the feedbacks received, and will consider how best to put in place the relevant enhancements. 18. when these enhancements are done, tma will work with the industry to promote development and trading of honia - based financial products. later on, it will also try to promote trading in the ois market, and hopefully develop an ois curve from honia. but this would have to depend on market conditions. 19. while honia serves as an alternative to hibor, there is currently no plan to discontinue hibor. hibor has been in place for many years and is still widely recognised by market

julia kiraly : governance, efficiency and integration in retail payments speech by ms julia kiraly, deputy governor of magyar nemzeti bank ( the central bank of hungary ), at the joint retail payments conference of the european central bank and the central bank of the republic of austria, vienna, 12 may 2011. * * * ladies and gentlemen, it is an honour that a hungarian central banker has been invited to represent the out eu countries in this panel. maybe i will not make a big mistake if i assume that this is somehow linked to the fact the hungary is the president of the eu council in the first half of 2011. i will focus on three 3 major topics : governance, efficiency and integration. i will speak primarily about hungarian aspects, and i would like to show you that most of hungarian aspects are closely linked to the european issues. governance i will take a bird ’ s eye view first. in my view in a network market such as that of payments, public authorities clearly have a responsibility in fostering the public good. we should not be shy even if this can be achieved only via regulation. governance mechanisms that integrate all stakeholders are very important. in lack of this, central bank or other public policy intervention is warranted. it is very important to find the proper governance model to steer the retail payments market at domestic level. in most countries, including hungary as well, central banks and banking communities set up payments councils or other special fora discussing payments related issues. in ideal case these fora should consist of representatives of market participants ( both supply and demand sides, i. e. payment service providers and payment service users ), and regulators. the involvement of payment service users is more difficult than the involvement of the payment service providers as the variety of users is significantly wider than that of payment service providers. consumers, retailers, businesses / corporates, small and medium - sized companies and national public administrations belong mostly to payment service users. we have to notice however, that the groups of payment service users are not homogenous and there is usually no single association for payment service users. therefore central banks have a key role in the governance of payments related issues. they should support the interest of customers, and act in accordance with the interest of the entire society and public good. central banks should act for social efficiency and should not be captive of short term banking community interests. i mention this because during our presidency work sometimes we have the impression that some central banks represent rather the short