important libor transition. urgency of the libor transition 10. as we all know, time is running short, and end - 2021 is fast approaching. now, with a clear and certain timetable for libor cessation, we should all work together with a sense of urgency. although certain us dollar libor settings will continue to be published until endjune 2023, this 18 - month extension is intended to allow time for more legacy us dollar libor contracts to mature. and, this won ’ t alter the fact that – libor will come to an end. it is therefore vital for us to continue our preparation that is currently underway, and avoid any further build - up of libor - related exposures going forward. with that in mind and to smoothen the transition process, we expect banks in hong kong to cease to issue new libor - linked contracts by the end of this year. development of the hkd overnight index average ( honia ) linked market 11. as we have stepped into the fourth quarter, we will soon move into a post - libor world. as we look ahead, libor transition also brings with it markets relating to the new risk - free rates ( rfrs ), like secured overnight financing rate ( sofr ). according to isda ’ s transition to rfrs review published in august, trading activity in sofr - linked otc interest rate derivatives ( ird ) continued to grow in q2 this year, with the traded notional of sofr - linked ird increased by 22 % to us $ 932 billion from us $ 762 billion in q1 2021. going forward, these new market segments will no doubt have further room to grow. 12. closer to home in hong kong, we are adopting a multiple - rate approach, under which both hong kong interbank offered rate ( hibor ) and honia are expected to co - exist. in line with the market development efforts across the world, we are taking active steps in promoting the further development of the honia - linked market. to facilitate the adoption and usage of honia, we are planning to issue honia - indexed floating rate notes ( frns ) under the government bond programme later this year. we hope the proposed frn issuance could encourage the private sector to consider issuing similar products in the future, and provide further impetus for the development of other honia - linked instruments in hong kong. 2 / 4 bis central bankers'speeches sustainable finance

. currency crashes amplified the adverse effects as capital fled the region in a drove. the asian miracle went bust. the capital flows that had once fertilised the impressive growth eventually caused a capsize when the asian financial crisis hit us in 1997 – a lesson that we all still vividly remember. 4. the asian financial crisis gave us a much - needed wakeup call at a dear price. yet, looking back, the crisis also has its silver linings : the painful adjustments that followed prompted governments to strengthen economic fundamentals, enhance banking systems, deepen local bond markets, and build up foreign reserves to cope with potential external shocks. because of these developments, the region has been able to emerge from the recent global financial crisis relatively unscathed and is now one of the key driving forces supporting the global economic recovery. 5. but we cannot afford to be complacent, as we are now confronted with a new round of challenges in uncharted waters. the unprecedented monetary easing in the advanced economies has led to global excess liquidity. and with the robust recovery of the emerging bis central bankers ’ speeches markets, there are powerful push and pull factors driving investors to search for yields in developing economies including asia. from q3 2009 to q4 2010, the net capital inflows to emerging asia1 amounted to us $ 541 bn, the largest inflows in recent years. 6. the strong capital inflows and resultant abundant liquidity have led to exchange rate appreciation, fuelled credit growth and driven up asset prices in the region. with output gaps closing, inflationary pressures are accelerating in a number of asian economies. capital flows also complicate the macroeconomic policy responses. while exchange rate appreciation and monetary tightening could theoretically cool down the economy, in practice, they may attract even more speculative inflows to profit from interest rate arbitrage and currency appreciation. 7. so how should we cope with these challenges presented by the unprecedented scale of global excess liquidity? given the global nature of fund flows and the increasing interconnectedness of the global financial system, it is obvious that national policies alone are insufficient to tackle the challenges. we need greater international and regional cooperation to manage risks posed by volatile capital flows to global financial stability. i believe there are three main areas for cooperation. 8. first is enhancing the resilience of the global and regional financial systems through financial regulatory reforms. a large amount of work in this area is under way at the