bursting of this bubble caused great damage to the european and us economies and people in europe and america have had to pay an unprecedented price. the us government used us $ 700 billion to bail out banks and car manufacturers, and the uk government spent gbp 76 billion on rescuing the royal bank of scotland and lloyds bank alone. many european governments have also bailed out their banking systems, including the injection of capital into large banks by the dutch and belgian governments. 6. based on experience in asia in the past two decades, i believe asset - price bubbles, rather than inflation, pose the greatest risk to financial stability. my reasons for thinking this are many and complex, and we may discuss them on another occasion. i am not saying that inflation is not a concern for asia. but i believe it is more important to address the harm that might be caused by asset - price bubbles. although i agree it is difficult to predict the occurrence of an asset - price bubble, i am certain that once a bubble is created, it will grow with immense power and suppressing it will be difficult. the bigger the bubble, the greater the devastation it will cause when it bursts. the best way to avoid the damage and heavy cost is to prevent the occurrence of a bubble or to contain it before it ’ s too late. to do this, we have to make decisions at the early stage of a bubble ’ s formation, not later. more importantly, when a bubble is taking shape, we have to take appropriate and effective steps to stop it getting too big. prudent risk management 7. the current extremely loose monetary policies around the world and the large inflows of funds provide an ideal environment and provided nourishment for the formation of asset - price bubbles in asia. so the risk of asset - price bubbles is not small. but hong kong cannot raise interest rates as it wishes, and even if we could, this would attract more hot money with undesirable consequences. so hong kong, like many other small and open economies, has to resort to other means to prevent the bubble from growing too large. 8. so what methods and tools should we use? for the property market, it is obvious that if there is a bottleneck or an imbalance in the supply of land, we have to deal with it. but the factors affecting demand, supply and prices of properties are very complex. sometimes property prices rise not because there is a shortage of residential flats to satisfy housing demand

, the legal doctrine of “ constitutional identity ” morphs into a political question. there is then a risk that sovereignty becomes an ideological concept. such “ sovereignism ” clashes with any attempt at further “ completing europe ’ s economic and monetary union ”, a report prepared by j. - c. juncker, in close cooperation with d. tusk, j. dijsselbloem, m. draghi and m. schulz, 22 june 2015. bis central bankers ’ speeches european integration. it could result in a failure to complete the european integration process. it should not be used as an excuse to opt for intergovernmental arrangements where supranational solutions would be more conducive to achieving a genuine economic and monetary union. the european integration process has demonstrated that democratic states can share sovereignty in a number of policy areas without losing statehood. nevertheless, we need to take into account that some policy areas do need a higher degree of democratic legitimacy and parliamentary control at the national level than others. this reasoning in no way supports those championing a national or constitutional identity. rather, it illustrates the need for different approaches to the respective policy areas, especially as the concept of constitutional identity has not only hampered deeper integration but risks winding back earlier achievements. as jaap hoeksma, philosopher of law put it, “ the transition of the eu from an international organisation to a european democracy has proceeded faster than most euro - sceptics ” predicted ; at the same time, “ the quality of this [ … ] democracy [ still ] needs more improvements than euro enthusiasts tend to assume ”. 4 hoeksma, j., op. cit. bis central bankers ’ speeches