responsibility for corporate treasury functions should consider making use of this system, which will lower costs and considerably reduce settlement risks. 26. technology changes our lives fundamentally. we are somewhat lucky to be living in an age of rapid technological revolution, and are perhaps luckier than our ancestors who experienced similar revolutions, because the revolution now going on is directed largely towards the arts of peace rather than of war. i say ‘ lucky ’ because, despite all the uncertainties and disruptions it brings, this technological revolution has the potential to change people ’ s lives for the better. but it also brings about pain, and, if not applied with skill, can accentuate inequalities of geography, education and wealth. labour is displaced by machines and software, and labour requirements turn away from the purely physical to the more knowledge - based – witness the slowness in the improvement of our unemployment rate. the workforce will need to adapt. and our economy will need to adapt to accommodate the kind of knowledge - based industries that are concentrated into a logistics, financial and digital hub. and technology itself, in the understandably confused state of revolution, is awfully difficult to price in financial markets, particularly when the highly uncertain nature of future earnings in respect of technologically intensive companies has to be taken into account, typically in the equity market, not to mention derivatives thereof. there has therefore been an additional, micro dimension of technology induced financial market volatility and this could well be manifested in enormous creation or destruction of wealth possibly to the extent equivalent to a substantial proportion of the gdp. investors and the regulators of markets and of institutions providing credit will also need to adapt. conclusion 27. but hong kong and its people have been always good at adapting in the past : this is a superflexible and super - adaptable city. there is every evidence now – after a flicker of self - doubt in the late 1990s – that the vigour, the creativity that brought us through the last 50 years is still in full flow. we shall need all of that vigour and creativity if we are really to make the most of the opportunities and ride out the volatilities of the coming decades. as with most things in life, these opportunities and volatilities come tangled together : we cannot just say yes to the opportunities without exposing ourselves to the volatilities. in my speech today, i have explored what i see as the three main opportunities for hong kong in the coming few years. trade

it today, is changing the role of governments. the other is the implication of globalisation for the choice of exchange rate regimes by individual jurisdictions. 12. to benefit from globalisation, national economic systems have made a distinct movement towards what alan greenspan has called ‘ market - oriented capitalist structures ’. fifty years or more ago, the clear trend was towards state regulation, centralisation, and – at the extreme – nationalisation. today, it is in the opposite direction : the themes are liberalisation, privatisation and deregulation. indeed, economies are now graded on the extent of their market orientation. governments have become smaller relative to the economies they serve. market competition, freed from distorting regulation or dirigiste policies, has come more fully into play, with lower transaction and information costs and increased market efficiency. there is generally greater recognition of the beneficial impact of market - oriented policies, and greater realisation that globalisation has made intervention, however desirable it might be in some cases, a great deal less effective. 13. we have therefore seen a sea change in the way in which governments approach economic management. in the post - war period the imperative of reconstruction and concerns about market failure predominated : so the approach was extensive government involvement in the functioning of an economy and frequent intervention. the consensus approach now, followed to one degree or another in most major economies, is government retreat from economic management, though without abdicating the responsibility for seeking to ensure that the arenas in which market forces come into play operate in a fair, equal and transparent way. 14. hong kong came into this new paradigm much earlier than most. in fact, the general view outside hong kong is that we are the most developed example of the paradigm. the philosophy of positive non - interventionism, coined twenty - odd years ago to describe the paradoxical but highly effective economic policy the government had already been following for some years, intersects neatly with the rise of global ‘ market - oriented capitalist structures ’ of whatever size and complexity. our free market tradition and our openness to the world have positioned us well for the new globalism. 15. but globalisation has brought challenges of a scale and immediacy that we have not seen before, and our very openness has at times been our vulnerability. the most difficult of these challenges have been in the financial market, where problems from outside can rapidly escalate into crises that threaten the integrity of our whole system. capital flows, particularly those