if the central bank were to try to slavishly keep cpi inflation at a certain target level at all times, it would have to change interest rates or other instruments frequently and significantly, and would probably not be successful in doing so. after all, nkm itself recommends focusing on the narrower price indices of so - called core or super - core inflation, which consist mainly of items whose prices are rigid. but there is no doubt that targeting a specific and narrow price index would not be very comprehensible to the markets and the public. for this reason, central banks tend to choose pragmatically to target a broad index close to the cpi and 3 / 5 bis - central bankers'speeches explain sophisticatedly in their communications why they sometimes react less or more strongly than the observed or forecasted cpi inflation would imply. under inflation targeting as practised in reality, central banks then set their rates to meet the cpi inflation forecast in the relatively short term. the problem is that we cannot reliably forecast cpi inflation and its twists and turns. virtually every major shock to inflation, in one direction or the other, has more or less surprised central banks this century. on the other hand, we are undoubtedly quite capable of understanding that inflationary potential is being generated in the economy. but again, we cannot reliably predict how this potential will manifest itself over time, through what channels it will enter the economy and whether or not it will show up as overt inflation at some point in time. particularly in small open economies, where shocks to the exchange rate and other shocks from abroad have a significant impact on inflation, it is quite likely that the generation of inflationary potential may initially translate into asset price growth or, in some cases, current account deficits rather than into overt cpi inflation. the latter may then stay quite low for a long time even when the economy is overheating. as a result, rather than inflation - forecast targeting, central banks may slide towards a response - torecent - inflation - numbers regime. what is the solution to this situation? i offer no simple one. the above dilemmas need to be reflected in our thought processes. in monetary policy decision - making, in addition to model - based forecasts of highly variable cpi inflation, we need to give equal weight to the longer - term fundamental inflationary pressures generated by macroeconomic, monetary and financial developments. i understand the arguments that we have no reliable indicator of these pressures and that few people outside

in these few years, the syndicated loan market has expanded in terms of number of arrangements and value of each arrangement. the rapid development of macao ’ s syndicated loan market has brought professionalism, diversification and internationalization to the financial sector of this enclave. they certainly have had positive impact. the arrangement of syndicated loans involves higher demand for professionals, such as analysts for specific industries, back office administrative and operational staff, property valuation agents and legal counsels. the growth in syndicated loan markets thus stimulates professionalism in a number of service sectors. in the past, syndicated loans concentrated on financing of local construction projects. but in the past few years, funding purposes of syndicated loans show diversification – from casinos, hotels, residential and commercial properties to construction projects of various nature. we expect that the development of syndicated loan market locally will accelerate the economic diversification process. the recent arrangements of several syndicated loans for gaming projects have attracted the participation of renowned international investment and commercial banks as arrangers and bookrunners. we believe that the continued growth in macao ’ s economy, and hence the accompanying expansion of the local syndicated loan market will certainly serve as catalyst for further globalization of the macao economy. as financial regulator, i encourage local financial institutions to participate in syndicated loans which will accelerate the expansion and internationalization of our financial sector. in the process, we should always be on the alert to mitigate losses arising from reckless lendings which will certainly undermine the stability and healthy development of our financial sector. before the asian financial crisis, some might use the term “ asset - based financing ” to describe the lending culture of the region. many credit exposure were in fact backed by assets before the crisis. but after the value of these assets had taken a nose - dive, the shock to the financial system was critical and it took a long time to recover. collaterals do provide good protection for credit risk but their market values are prone to fluctuations under the ever - changing economic and monetary conditions and should only be regarded as the last resort for repayment. the condition of the overall economy, the soundness of the financial system and the self - perfection of the regulatory regime in the region have greatly improved since the asian financial crisis. the resilience of the region to withstand the same sort of crisis has been much strengthened. but will it be able to withstand another shock of a more devastating magnitude, especially now that the global financial markets have been characterized by two features ; inflated asset prices and excess liquid