in the labour market by, for instance, the employment rate 10, unemployment, the employment gap and the hours gap. the imf ( 2010 ), world economic outlook october 2010. see oecd ( 2010 ), oecd economic outlook, no. 87, may 2010. the employment rate is defined as the proportion of the population aged 15 – 74 in employment, expressed as a percentage. employment gap and the hours gap have been estimated with the aid of hp trends and are thus subject to the problems entailed by such estimates. in contrast, the employment rate and unemployment are not associated with the same type of technical problems, but here it is instead difficult to know what can be considered to be normal levels for the respective variables. in the figure, they have been included as deviations from the average in 2000 – 2007, without taking a stance on which levels should be considered normal. they may have been affected both by the reforms made and by the deep recession. these are, of course, important issues to be addressed, but i will not go into them today. ( figure 6. labour market gaps ). the various labour market gaps co - vary for natural reasons. however, the employment rate, the employment gap and the hours gap reach zero at the start of 2011 and are faintly positive for the rest of the forecast period, while unemployment is above average over the entire forecast period. it is common for unemployment to increase rapidly in a deep recession and decrease slowly during the recovery. however, it is also possible that we are underestimating the strength of the recovery in the labour market – as, indeed, we have done recently. it can also be noted that the positive deviations from the average are of the same magnitude in 2007 as they were at the previous peak in 2001. the national institute of economic research ’ s economic tendency survey can also be used to describe resource utilisation. there exists a clear connection between various variables in the survey. for example, companies ’ planned price increases co - vary with the other variables, for example shortage of labour. ( figure 7. indicators for the business sector ). however, most of these reported variables are ones that show changes. this is true of demand, for example. the question is whether it is expected to become better or worse. consequently, these variables are not good measures of the level of resource utilisation, but rather of whether this is increasing or decreasing. however, the business tendency surveys also include variables

. this is no small achievement, and this stability is underlined by a credible and strong monetary system that is well understood by the market. 1 / 6 bis - central bankers'speeches let me start with a few observations on the hkd market. along with the us monetary policy tightening, the widening interest rate differential between the hong kong and us dollars has incentivised carry trades, which have led to the weak - side convertibility undertaking ( cu ) being triggered repeatedly. a smaller aggregate balance ( ab ) has made the hong kong dollar more sensitive to liquidity conditions and movements in the us dollar interest rate. it's important to bear in mind, despite the sometimes excitable headlines in the press, that the triggering of the weak - side cu and the automatic interest rate adjustment mechanism are part of the way the linked exchange rate system is designed to work. the link is the bedrock of the hong kong dollar market, which has continued to operate in a smooth and orderly way as it is designed to do. it so happens that this year is the 40th anniversary of the linked exchange rate system. for four decades, it has weathered many economic and interest rate cycles - and several outright crises - and has proved to be highly stable and resilient. the link has served hong kong well and will continue to do so. just want to say it again for record : we have absolutely no intention to change it! but in case words like " automatic " make it sound as though this all just happens, let me be clear that we recognise that many of you working in the treasury market also make an important contribution to the stability of the hkd market. with a lower ab, timely and efficient funding management have become more important than they were when liquidity was plentiful. the hkma has maintained close communication with banks to facilitate the adaptation to changing liquidity conditions, and encourage efficient recycling of liquidity to the interbank market. there is also a range of liquidity facilities for banks to use when they need to. in addition, following industry feedback, in july the hkma significantly narrowed the long - standing intra - day time gap of exchange fund bills allotment and redemption, from a few hours to just a matter of minutes. this seems just a small technical fix, but calibrations like this helped minimise possible friction in interbank liquidity and make the market even more efficient. our banking system is also holding up well, despite the challenges faced by the financial