a currency board with a fixed rate against the us dollar. i have recently written and spoken at some length on the rationale behind this choice and do not intend to repeat all of that today. but let me just reiterate one of my principal contentions – namely that monetary policy, which includes exchange rate policy, cannot determine an economy's competitiveness outside the relatively short term. competitiveness is determined by the intrinsic efficiency of the economy, which is in turn the result of investment, productivity, structural evolution, and so on ; these may in turn be amenable to influence by government policy in various fields, but the role of monetary policy is to provide a stable monetary environment within which those longer - term forces can operate most propitiously, and not itself to attempt short - term fine - tuning. there is one further aspect of this debate which i should like to address, since it seems to be the focus of increasing attention. it is the issue of what should or should not be done with the hong kong dollar, were the renminbi to move more flexibly against the us dollar, and, more particularly, whether we should consider pegging the hong kong dollar to the renminbi. adjustment of competitiveness prices in hong kong are observed to be flexible in both directions in response to market forces. one of these forces is the influence of competing prices from the mainland ; our research indicates that there is a gradual process of convergence at work ( which includes rises in prices across the border as well as falls in hong kong ), although this may be weaker than some observers claim and certainly does not mean that prices will or should eventually equalise completely. moreover, prices of tradables in hong kong are found to be particularly adept at adjusting to movements in the effective exchange rate. in other words, if our prices become misaligned against foreign prices because of some movement in exchange rates ( such as by the us dollar moving against other major currencies and pulling the hong kong dollar with it ), hong kong prices are quick to adjust in order to restore competitive equilibrium. at the same time, it appears that prices in the mainland are, by international standards, also quite flexible. two conclusions can be drawn from these observations. one is that prices between hong kong and the mainland are well able to adjust relative to one another without any assistance from the exchange rate. the other is that, if the exchange rate were to move around and create disequilibria between prices

has also been accompanied by reports of abusive, unethical - - and in some cases illegal - - lending practices. given these concerns, and after considering public comments, the federal reserve determined that information on loan prices was critical to gaining insight into the functioning of the higher - cost mortgage market. the board's amendments to its hmda regulation require the collection and reporting of pricing data, among other things, and are consistent with the need to keep hmda data relevant to the fair lending issues presented by today's marketplace. before we go further into recent events, it may be instructive to take a look back at hmda and see how the current rules have evolved. when hmda was originally enacted in the mid - 1970s, the only information required to be reported was the location ( by census tract ) of the loans. many of you will remember that this addressed the so - called redlining issue. the data simply helped the public and regulators track where an institution was lending and more important, where it was not. it wasn't until the late 1980s that the reporting requirements were expanded to include data on race, sex, and income level for each loan. the current concern about the release of the new pricing data is reminiscent of the concern about the first release, fifteen years ago, of data on race and sex. those data, and the studies surrounding their release, raised serious questions about whether the mortgage market was serving people of all races fairly. in 1989, the concern was whether minority borrowers were denied mortgage loans more frequently than white borrowers and, if so, whether the disparity reflected discrimination. today, as i stated earlier, the issue is no longer limited to whether minority borrowers have access to credit but, rather, whether the price of that credit reflects the lender's risk or whether it is tied in any way to discrimination. today's mortgage market offers a broad spectrum of loan products, ranging from prime loans for borrowers with indisputably solid credit histories, on one end, to what have come to be known as 1 / 4 predatory loans, on the other. in between are a variety of higher - cost loans for borrowers who have impaired credit ratings, high debt - to - income ratios, high loan - to - value ratios, or some other risk characteristic for which lenders may legitimately charge a higher rate as protection against default. but it is the abusive end of the spectrum that has drawn so much attention and