markets ’ risk perception led to financial fragmentation in the euro area, which affected not only the most vulnerable economies via an inability to access external financing, but also the monetary policy transmission mechanism itself, and, consequently, the emu. the fragilities brought to light by the emu framework made its deepening inevitable, which over the past few years has resulted in : • the strengthening of fiscal discipline mechanisms, with the adoption of the fiscal compact, the six - pack and the two - pack, and the establishment of the european semester as an annual cycle for policy coordination in the eu ; • the establishment of mechanisms to prevent the build - up of imbalances impacting on the competitive position of euro area countries ( the so - called macroeconomic imbalances procedure ) ; bis central bankers ’ speeches • the creation of a banking union, with the purpose of breaking the bank - sovereign nexus, which was behind the severity of the euro area crisis ; • the establishment of a common mechanism for last - resort lending subject to conditionality ( european stability mechanism ). where we stand : a banking union under construction today, we stand on undeniably stronger ground than we did before the onset of the international financial crisis, but which is still insufficient to break the bank - sovereign nexus and safeguard the existence of a genuine european financial market. the remaining shortcomings result mostly from three factors : first, the banking union, which is composed of three pillars, is still institutionally incomplete. we have : • a single supervisory mechanism, which has been the single supervisory authority since november 2014 ; • a single resolution mechanism, invested with resolution authority powers since 1 january 2016, but still subject to the limited funding capacity of the european resolution fund ; • the intention, agreed but yet to be implemented, to establish a common deposit guarantee scheme. second, europe lacks as yet a network of large banks established across all territories, as country - based banking systems are still predominant. institutions tend to have a limited presence at eu level, while having systemic importance in the territory where their business is concentrated. this stands in contrast to what is seen, for instance, in the united states, where large banks with reach across the country coexist with small local banks, which are not systemic in nature. in the current framework of a banking union still under construction, national authorities continue to be responsible for national financial stability, i. e. they continue to be responsible – and therefore accountable – for the safeguarding of depositors

the following measures to support responsible investment : _ _ _ ( a ) we have already incorporated esg factors in our credit risk analysis of bonds ; we have required our external managers of the hong kong equity portfolios to comply ( b ) with the principles of responsible ownership promulgated by the securities and futures commission in 2016 ; we have invested two tranches of us $ 1 billion each in the managed co - lending portfolio ( c ) programme ( mcpp ) run by the ifc. a substantial part of the mcpp will target sustainable investments across emerging markets ; ( d ) we will further grow our green bond portfolio, through direct investment or investment in green bond funds ; ( e ) we will participate in esg - themed public equities investments through external managers in passive or active mandates targeting esg benchmark indices ; and ( f ) we will accord green accreditation as a predominant factor in investment in buildings in our real estate portfolio. 6. instead of setting a quantitative threshold or target for green investments, we believe our present approach is a more pragmatic and likely to be a more effective way of promoting green and esg investments. we will continue to work with like - minded investors to promote focus on good esg practices in managing their investments. in the interest of transparency, the hkma will also consider an appropriate framework for disclosing the exchange fund ’ s green and esg investment efforts without arousing market sensitivity in the process. capacity building in green finance : centre for green finance ( cgf ) 7. hong kong is already one of the major green finance hubs in the world. last year a total of us $ 11 billion of green bonds were issued and arranged in hong kong. earlier this morning, the hkma, as the implementation agent of the hk $ 100 billion government green bond programme, announced that a roadshow will be held for a potential green bond offering. under the outline development plan for the guangdong - hong kong - macao greater bay 2 / 3 bis central bankers'speeches area, hong kong is the designated green finance centre in the area. with the launch of the green and sustainable banking initiative and the rapid growth of the green bond market, hong kong possesses enormous potential to become a leading green finance hub in the world. however, in pursuing our aspirations, there is a pressing need to upgrade our capacity and expertise in green finance in the financial industry. 8. with this in mind, the hkma will set up shortly a new centre