norman t l chan : recent economic and financial developments in hong kong remarks by mr norman t l chan, chief executive of the hong kong monetary authority, hong kong, 22 february 2013. * * * the property market in hong kong moderated briefly after the introduction of the fifth round of prudential measures on property mortgages by the hkma in september 2012 and the new tax measures by the government in october 2012. however, activities in the property market picked up again recently, with significant increases in transaction volume and prices of residential properties as well as commercial and industrial properties. the risk of overheating in the property market has, once again, risen sharply. moreover, the recent increase in intensity of the quantitative easing by central banks in europe, the us and japan has made it more difficult and uncertain for them to “ exit ” these measures in the future. it will be particularly so when inflationary pressures emerge again in the advanced economies, and the pace and extent of interest rate hike could be greater than originally expected. in fact, in the last quarter of 2012, the hkma already started requesting local banks to assume a of 300 bps increase in interest rate above the baseline scenario for its mortgage portfolio when conducting stress testing. in order to further enhance banks ’ risk management in property mortgage lending and to strengthen borrowers ’ resilience to withstand future interest rate hikes, the hkma has just issued a set of guidelines to banks, requiring them to adopt an increase of 300 bps instead of 200 bps of interest rate when stress - testing the repayment ability of mortgage applicants. this measure is applicable to all types of mortgages, including residential as well as commercial and industrial property mortgages. the risk of overheating in the commercial and industrial property market also continues to rise. our experience shows that the quality of commercial and industrial property mortgages will deteriorate more significantly than that of residential property mortgages during market downturns. in view of these circumstances, our guidelines have also required banks to lower the maximum ltv ratio of mortgage loans for commercial and industrial properties, whether or not for self - use, by 10 percentage points from the existing applicable levels. for example, for mortgage applicants with income mainly derived from hong kong, the maximum ltv ratio will be lowered from 50 % to 40 %. if the applicant ’ s income is mainly derived from outside hong kong, the maximum ltv ratio will be lowered from the current 40 % to 30 %. the

the same time, it would be useful to prioritise those market segments that can, in the short term, benefit from technological progress and infrastructure modernisation. among these, overthe - counter ( otc ) markets, such as the commercial papers market and the settlement of investment fund units, represent immediate opportunities to enhance the efficiency and transparency of post - trading processes. similarly, green finance subject to strict criteria, a rapidlygrowing segment, could benefit greatly from the increased transparency that appropriate modernisation of market infrastructures could bring, thereby facilitating the financing of projects as part of the ecological and digital transition. * * * to conclude, it seems to me that today, as in the past, a mixture of competition and cooperation is needed if the post - trading environment is to make the expected contribution to developing europe's financial firepower. important strategic and operational matters can be included within the scope of this cooperation. i have touched upon some of these and, as you will have understood, the banque de france is ready to play its part in this cooperation and is always ready to listen to the views of paris financial centre participants. page 5 of 5 euroclear conference innovating to serve the capital markets union opening address what will tomorrow ’ s post - trading industry look like and what forms of cooperation will it deploy? denis beau first deputy governor 3 october 2024 public a strategic vision to meet cmu challenges in the short term : expand the eurosystem's service offering for settling tokenised assets in central bank currency credit institutions retail payments payment scheme wholesale payments organised markets payment systems national e. g. cb e. g. core ( fr ) securities mtf european e. g. euro1 otc markets cobm ccp cobm european csd e. g. rt1, step2 - t tokenisation payment stable coins tokenised deposits securities tokenised securities e. g. ethereum cobm cobm cobm cebm fx cls banking correspondent central liquidity management ( clm ) rtgs t2s tips cebm settlement solutions for tokenised assets cbdc a strategic vision to meet cmu challenges in the long term : create a unified european ledger wholesale retail payments payment systems national e. g. core ( fr ) european e. g. euro1 ccp european e. g. rt1 csd tokenised deposits cbdc unified european ledger central liquidity management ( clm ) t2s tips ( fps ) cbdc payments stable