trade closer to the floor ( sdf rate ) of the interest rate corridor due to structural excess liquidity in the market. however, the funding structure of banks, which is uneven across individual banks and mostly dominated by large mobile corporate deposits and those managed by asset managers, has the effect of raising wholesale deposit rates and suppressing interest rates on retail savings deposits. 3. 9 with effect from april 1, 2023, commercial banks were allowed to independently determine their own plrs. this move is expected to contribute positively to banking sector developments through promoting competition within the banking industry. commercial banks report their plrs to the bank where a market average is published to the market for transparency and to promote competition. it is, however, worth noting that all commercial banks have maintained their plrs at mopr plus 411 basis points. as a result, the average plr was 6. 51 percent in december 2023. 3. 10 meanwhile, use of the primary reserve requirement averaging ( prra ) for management of liquidity by banks is not universal. while there are banks that actively use the averaging tool, others prefer to maintain full adherence throughout. 3. 11 the yield curve, anchored on the 7 - day bobcs rate, is upward sloping, albeit steeper at the shorter end ( transition from the one - month bobcs to the 3 - month treasury bills ( t - bills ). the government securities market improved in 2023 with less upward pressure on yields than in the past, with noticeable improvement in the uptake of government securities at auctions. a comparison of bobc, t - bill and government bond yields ( yield curve ) as at the end of december 2022 and december 2023 indicates that yields generally decreased across the maturity spectrum. the improvement in the inflation trajectory also helped in keeping yields relatively lower. the institutional and operational changes, including enhanced transparency and market innovations appear to be contributing to the improvement. specifically, the government annual borrowing plan and issuance calendar were launched and published in june, while switch auctions11 were introduced to manage liquidity and refinancing risk. the decrease in the yields was also on the back of increased liquidity in the market emanating from government spending and the decline in the inflation rate ( chart 3. 6 ). _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ excess liquidity in the banking sector is defined here as the sum of commercial banks ’ overnight deposits

peter pang : a decade of hong kong dollar settlement in the cls system opening remarks by mr peter pang, deputy chief executive of the hong kong monetary authority, at the 10th anniversary celebration of hong kong dollar settlement in cls, hong kong, 21 october 2014. * * * david 1, distinguished guests, ladies and gentlemen, i am honoured to be here today to celebrate the 10th anniversary of the hong kong dollar settlement in the cls system. opening 2. if we were a married couple, this event would mark our tin anniversary, with tin symbolizing durability and pliability. it is good to note that our bonding remains robust, despite the fact that cls has 16 other currency partners, and its desire to have more in the future. 3. according to jane austen, “ happiness in marriage is entirely a matter of chance ”. being a monetary authority, the hkma would not leave such an important financial infrastructure for addressing the fx settlement risk to chance. 4. the one thing that keeps our bonding with cls strong is our common vision – to provide the solution to help market players eliminate the fx settlement risks through a highly effective and efficient settlement platform. 5. our decision to join the cls in 2004 was based on the simple fact that cls provides the most powerful global solution to eliminate the fx settlement risks among market players. and cls has delivered such a solution without a hitch in the past decade. good times 6. like all happy marriages, the bonding should foster growth and help the partners to realise their potential during good times ; and provide an anchor to help them to face the challenges of the bad times with resilience and confidence. 7. both partners have certainly done well during the good times in the past decade. ( i ) hk ’ s developments 8. during this period, hong kong has continued to consolidate its role as a premier international financial centre and has become a more globalised economy : – the total assets of the banking system have increased 2. 7 times to hk $ 18 trillion, with foreign currency assets accounting for about 60 % of the pool. – the market capitalization of the hong kong stock exchange has become more than 4 times bigger, advancing from number 8 to number 6 in the global ladder. – the bond market has also increased by about 3 times, with foreign currency denominated bonds accounting for about 40 % for most of the time. 9. hong kong has also become a hub for private wealth and asset management.