market participants and has been well supported by recent empirical research. for example, antulio bomfim has demonstrated that the shape of the term structure of treasury yields can be effectively described by a two - factor model, in which the first factor corresponds to the current setting of the funds rate and the second factor closely approximates medium - term monetary policy expectations ( bomfim, 2003 ). the fact that market expectations of future settings of the federal funds rate are at least as important as the current value of the funds rate in determining key interest rates such as bond and mortgage rates suggests a potentially important role for central bank communication : if effective communication can help financial markets develop more accurate expectations of the likely future course of the funds rate, policy will be more effective ( in a precise sense that i will explain further soon ), and risk in financial markets should be reduced as well. it is worth emphasizing that the predictability of monetary policy actions has both short - run and long - run aspects. a central bank may, through various means, improve the market's ability to anticipate its next policy move. improving short - term predictability is not unimportant, because it may reduce risk premiums in asset markets and influence shorter - term yields. but signaling the likely action at the next meeting is not sufficient for effective policymaking. because the values of long - term assets are affected by the whole trajectory of expected short - term rates, it is even more vital that information relevant to estimating that trajectory be communicated. as i will argue later, this can usually be done only by providing information about the central bank's objectives, assessment of the economy, and policy strategy. communication, asymmetric information and learning ideally, what should central bank communication try to achieve? in an important analysis of the issue of central bank transparency, my fomc colleague william poole laid out a benchmark case in which the potential benefits of communication would be fully realized ( poole, 2003 ). in this benchmark case, the central bank has well - defined objectives and pursues regular and systematic policies consistent with those objectives. more important for our purposes, in this idealized world, financial markets are highly efficient and well informed. in particular, financial - market participants have access to all the information that the central bank uses in making policy decisions. let us call the premise that the central bank has no significant information advantage over the private sector the assumption of symmetric information. if the conditions of systematic

yiu - kwan choi : launch of the cmu bond price bulletin remarks by mr yiu - kwan choi, deputy chief executive of the hong kong monetary authority, at the signing ceremony for the launch of cmu bond price bulletin, hong kong, 9 january 2006. * * * it gives me great pleasure to welcome you all to this signing ceremony for the launch of the cmu bond price bulletin. we are pleased to see the launch of the bulletin. this, we believe, will be a useful tool to help promote the retail bond market in hong kong. as you know, financial infrastructure development has always been a priority item on the hkma's policy agenda. a robust financial infrastructure is important in maintaining the stability and integrity of the monetary and financial systems and in strengthening hong kong's status as an international financial centre. over the years, we are proud that, with the support of banks and other financial institutions, the hkma has built a sophisticated financial infrastructure that meets the best international standards. having said that, we are conscious that there is always scope to further strengthen our financial infrastructure to take account of the latest technology and market developments. it was precisely for this reason that the hkma conducted a comprehensive review last year on financial infrastructure development in hong kong. the launch of the bulletin is one of the recommendations arising from this review. the objective is to provide retail investors with convenient on - line access to information on bond products and bond prices. we believe that the launch of the bulletin will help to raise product awareness and improve price transparency, thereby helping to promote the development of the retail bond market in hong kong. the bulletin is developed by the central moneymarkets unit of the hkma. we are delighted to have eight major banks, which are present here today, to be the price providers. thanks to their support, indicative bid / offer prices of over 200 bonds of different currencies issued by both public and private sector entities will be available on bulletin. investors may access the bulletin later today for bond information. the website address is https : / / www. cmu. org. hk. the bulletin also provides direct hyperlinks to the price providersa€™ websites to facilitate investors to approach the price providers for trading. relevant transaction charges imposed by individual price providers are also posted on the bulletin. retail investors can easily gain access to, and conclude trades with, the price providers in a convenient, secure and efficient manner. we are thankful to banks and potential users for