. naturally the hkma has accorded high priority in our ongoing supervision of banks to ensure that the underwriting standards are upheld all the time. i am pleased to report that the non - performing loan ( npl ) ratio, which is a key indicator to assess the credit quality of the mainland - related lending, has remained at a healthy level of around 0. 7 %, which is just slightly above the overall npl ratio of 0. 56 % for all bank loans. wealth management 11. given the rapid growth and accumulation of wealth in hong kong and the mainland, there is a strong demand for wealth management services. the asset - under - management of private banking in hong kong now amounts to roughly us $ 1 trillion. again, risk management is the key to the sustainable development of the private banking industry. there are two key aspects of risk management in the private wealth business. first, the banks must conduct proper kyc processes, especially on the source of funds and ongoing monitoring of suspicious fund flows for anti - money laundering / counter - terrorist financing purposes. second, the private banks must understand the risk appetite / tolerance level of their clients on the one hand and conduct proper product due diligence before marketing them to clients. if hong kong wishes to remain the preferred centre for private wealth management, we must strive to strike the right balance between the need to accord appropriate investor protection and allow the banks to provide user - friendly and efficient services to clients. to succeed in this endeavour, the regulators must work in close collaboration with the industry to continue adapting the rules and practices to cater for the evolving demands of the customers and the rapidly changing financial markets. there is no magic quick fix available, and i hope that the stakeholders would agree to adopt a truly risk - based approach. what it means is that the regulators should articulate the risks or problems that they seek to address while the industry should consider how proper risk management could be achieved without over - interpreting the regulations or imposing rigid processes that drive away customers. soft power 12. at the end of the day, any premier ifc must possess superior soft power if it wishes to sustain such position. soft power is the sum of a wide range of tangible market infrastructure and intangible strengths. while there must be a robust but market - friendly regulatory regime, we need to have a high degree of professionalism amongst the industry practitioners. fully cognizant of this principle, the hkma has in the last decade or so launched many soft power

until the mid - 1990s. our terms of trade were weakened, productivity developed more weakly in sweden than in other countries and during certain periods investors were concerned over a rapidly growing central government debt. however, developments during the latter part of the 1990s were rather different. the growth in productivity and gdp has been better and the inflation rate as low as the average among our main trading partners, while the central government debt has declined, which should have favoured a stronger krona. nevertheless, the krona has depreciated. a more detailed discussion of the stabilisation policy tools within the emu can be found in the report “ stability and stabilisation policy in the emu ” ( sou 2001 : 62 ), which can be downloaded from http : / / finans. regeringen. se / propositionermm / sou / index. htm. a small part of the most recent depreciation can be explained by real economy factors : the terms of trade have deteriorated slightly due to falling prices on telecom products ; exports have declined more heavily in sweden than in many other countries following on from the economic slowdown in the usa ; and a falling order intake for exports has created a declining demand for the krona. however, there are also other explanations that are not directly concerned with real economy factors, but have instead been steered by financial flows, i. e. that the krona has been affected by a net outflow of capital from sweden. the development of the krona and the stock market has shown a strong correlation since the beginning of 2000. this is probably connected with foreign investors selling swedish shares in line with falls on the stock market, which has affected sweden more than other countries, as a large part of the stock market value is owned by foreign investors. moreover, swedish investors have bought a large amount of foreign shares, which is probably connected with the new pension system and the freer investment regulations for the ap pension funds. it has been possible for the ap pension funds to increase their foreign exchange exposure, i. e. the percentage of foreign assets, from 10 to 15 per cent with effect from this year. the funds can increase their exposure by five percentage points a year to a maximum of 40 per cent in 2006. on top of this comes a factor that is difficult to explain on the basis of classical exchange rate theories. the krona is affected to a large extent by general unease on the global financial markets. during times of financial unrest the krona