. this is because, even as euroscepticism rises, the external case for working together has rarely been stronger or more visible to the public. it is now plain to see that the rules and norms which have governed international relations since the second world war are being challenged – replaced by a new power politics where large economies try to impose their will on smaller ones. in such a world, it is undeniable that the eu amplifies the sovereignty of its members. in parallel, brexit has served to underline the pros of membership and the cons of being outside. it is now established that leaving the eu presents a trade - off : countries either have to follow the rules they could once set ; or they have accept a diminished level of market access, and ultimately lower welfare for their people. this renewed visibility presents an opportunity for the eu to reconnect with the european public 1 / 2 bis central bankers'speeches and re - find its raison d ’ etre. in this spirit, with the ep elections approaching, those who believe in europe have two imperatives : to promote and defend the eu where it is working ; and to fix it quickly where it is not. i hope this conference can help carry that debate forward. 2 / 2 bis central bankers'speeches

channel for offshore rmb funds to invest on the mainland. market responses to this scheme have been very positive. 30. as i mentioned at the beginning, mainland china is now the second largest economy and the single largest source of new economic activities in the world. the increasing use of rmb in the international stage – although that will be a gradual process – will have profound implications on the global financial landscape in the years to come. concluding remarks 31. so, the trends are very clear. now is a critical time for market players, including banks, financial institutions and asset management companies, to prepare themselves well for the unprecedented opportunities presented by these two important trends in china. 32. before i conclude, i would like to say a few words about the linked exchange rate system in hong kong. as the offshore rmb business continues to develop in hong kong, there are views that the rmb may undermine the status of the hong kong dollar. some have even said that it would be natural to consider pegging the hong kong dollar to the rmb instead of the us dollar. we do not agree with these views. 33. let ’ s take a look at the uk ’ s experience in developing the eurodollar market. despite the sheer size of the eurodollar market in the uk, it has not undermined the role of the british pound in serving the domestic economy. likewise, in the eyes of local investors in hong kong, rmb mainly represents an attractive investment choice in addition to other foreign currencies, and does not create any problems at all to the hong kong dollar ’ s role as a locally - used currency. 34. what about the idea of pegging the hong kong dollar to the rmb instead of the us dollar? in thinking about this question, it is important to recognise that the rmb can only be an anchor currency when it meets a number of important fundamental conditions. 35. first, there should be a high degree of synchronisation between the economic cycles in hong kong and the mainland. at present, hong kong ’ s economic cycle is more affected by the flows of trade between the mainland and the advanced economies, rather than domestic demand of the mainland. and the business cycle synchronisation between hong kong and the us continues to be higher than that between hong kong and the mainland. secondly, to make it technically feasible for the rmb to be a reserve currency, the rmb must be freely convertible, the capital account control on the mainland