to time. the average fee per transaction in december 2017 was us $ 34. to put the matter into proper perspective, electronic payments, using either balances kept by commercial banks at central banks or retail payments using commercial bank balances, typically take a few seconds and cost a fraction of the transaction fees in bitcoin transfers. store of value : crypto - currencies such as bitcoin have displayed very high volatility in value. crypto - currencies have no intrinsic value and are not backed by any institution or body regarding its value or purchasing power. their price and thus value are determined solely by the supply and demand forces prevailing at the time, which can fluctuate sharply depending on the appetite of the participants. it is true that in some countries, there has been high volatility in the value or purchasing power of their ( b ) money, too. however, one must bear in mind that this kind of volatility normally happens in times of crisis or in jurisdictions that have rather bad macroeconomic, fiscal or monetary discipline. but for bitcoin and most other crypto - currencies, their volatility seems to be structural in nature and the market dynamics that determine their price or value is rather opaque and hard to discern. with such high volatility in value and opaqueness, it poses great risks to the parties in accepting cryptocurrencies as a store of value or means of exchange for goods and services. ( c ) unit of account : with very high volatility and limited use as a means of payment, it is hard to envisage how any society could adopt crypto - currencies as a unit of account. 5. as far as i can see, crypto - currencies are not qualified to become money based on the analysis mentioned above. it is not a question of time that they can become more widely accepted as money. quite the contrary, the design of these crypto - currencies, such as bitcoin, is such that the transaction time and costs would go up if more people use or transfer them. unlike other forms of electronic money using central bank or commercial bank balances, crypto - currencies are not scalable, which undermines its prospect of gaining “ moneyness ” over time. for this reason, i would like to call these “ crypto - currencies ” as crypto - assets for the rest of our discussion as

. this means that they will need to find alternative means to boost income. one option is to diversify into the sale of products like unit trusts, pensions and life insurance that offer the opportunity to earn fee income. another is to focus on lending to sectors such as the smes that provide higher returns at the expense of higher risk. a common factor in such initiatives is the need to cope with greater complexity in business development and risk management. technology can help to deal with these issues, but this creates its own set of problems. banks need to be able to afford the necessary investment in technology and to develop or obtain the expertise to utilise technology properly. the objectives of our reform measures the kpmg / barents consultancy study broadly anticipated these trends. the policy prescription was that we should not stand in the way of the forces of change, nor should we simply do nothing and see what happens. rather, it was concluded that we should try to manage the process of change through careful reform. the underlying aim of our reform package therefore is to help to improve efficiency and innovation in the banking sector through increased competition. among other things, this might provide incentives for the local banks to think harder about merger and acquisition. if we had simply done nothing and left competitive barriers, like the interest rate rules, in place, this might have sent misleading signals to the local banks, and prevented them from reacting quickly enough to the changes taking place around them. a further objective of our reforms was to increase the attractiveness of hong kong as an international financial centre. also, bearing in mind that increased competition can bring with it increased risk, we were also conscious of the need to take steps to enhance the safety and stability of the banking system. i am not in this speech going to summarise all our reform measures, which are due to be implemented over the period to the end of 2001. instead, i will describe what we have done so far, and the main tasks that remain to be done. the progress on competitive reforms so far we have introduced three main changes that are intended to promote competition : • in september 1999, the one - building condition that applied to foreign banks licensed after 1978 was relaxed to allow such banks to open branches in a maximum of three separate buildings. at the same time we eliminated any restriction on the number of regional and back offices that foreign banks can maintain. • in december 1999, we announced that agreement had been reached with the various parties involved for restricted licence banks to join