enjoys solid growth with low inflation, a sound fiscal position and a competitive financial system. financial markets are booming. although some were anxious about the possible outcome of handover to china ten years ago, fortunately, this anxiety proved unfounded. looking ahead hong kong seems to make constant efforts toward a more prosperous future, and seems never to be tempted towards complacency. a good example would be the fostering of renminbi - related financial business through issuances of renminbi bonds in hong kong, while maintaining a currency peg to the u. s. dollar. hong kong is blessed with an enviable geographic advantage, being located in the centre of a rapidly - growing asia. hong kong is also rich in the most important production factor for any industry, namely talented human resources like all of you here at this reception. this is, i believe an indispensable strength of hong kong. how hong kong develops further as an international financial centre is of enormous interest to everyone. finally, i thank again all our guests for your friendship and co - operation. recently, everyone in the asian financial markets is talking about the " unwinding " of the so - called yen carry trades. however, there will definitely be no " unwinding " of the 50 - year - long good relationship between hong kong and the bank of japan. i am fully convinced the co - operation and mutual trust between us will accumulate further. thank you.

. following the normalization of sino - japanese relationships in 1972, business trips to the mainland became possible. in addition, the bank started to send its staff to hong kong university to let them study chinese language. since then, hong kong has played a role as a cradle to foster experts on china at the bank. in 1978, hong kong resumed granting licenses to eligible foreign banks, thereby strengthening its status as an international financial centre. along with these developments, the importance of the hong kong office to the bank was firmly established. hong kong over the last decade the history of hong kong has always been spectacular, but i am convinced the last decade has been the most challenging one. let me mention just a few particularly significant events. the first is the asian currency crisis. since asia had been praised at that time as a " growth centre, " the fact that the crisis occurred in asia surprised us. it also reminded us of the risk for central banks of drifting into complacency. as you know, this experience led to closer cooperation between the hong kong monetary authority, the bank of japan and other asian central banks. this co - operation bore fruit in the shape of the asian bond fund, which aims to create a more advanced bond market in asia, and the swap arrangements called the chiang mai initiative which act as a safeguard against any future crisis. when there was mounting selling pressure on the hong kong dollar, the hong kong monetary authority, under the leadership of chief executive yam, adopted various measures to further strengthen the currency board system. the decisive actions remain vivid in my mind. although japan's currency system differs from hong kong's, we would like to express our respect for the authority's strong belief in achieving the ultimate goal for a central bank, namely to safeguard the currency system. the second is the sars epidemic of 2003. it is understandable that some people lost confidence in hong kong, as the city faced this appalling epidemic just as the wounds of the asian currency crisis had begun to heal. however, hong kong coped successfully with this epidemic by implementing strict hygiene control measures. in addition, the increased number of visitors from the mainland to hong kong, supported by deregulation in the mainland, gave renewed vigor to the tourism industry, severely hit by sars, thereby strengthening ties between hong kong and the mainland. last but not least, let me highlight once again hong kong's current rapid growth, with closer economic ties with the mainland. hong kong