that there are still hidden external uncertainties. we should continue to pay attention, stay vigilant and exercise our prudence. we should be well prepared to take on the risks and adverse effects arising from external environmental changes. they may inflict harms on our economy and financial system. as the financial regulator, amcm keeps supervising banks operating in the msar so as to maintain security and stability of the macao financial system. all along, our supervisory work has had the support and coordination of friends of the sector. as such, i duly represent amcm to express our candid appreciation to our practitioners for their support and cooperation and their incessant endeavour in maintaining the financial stability and healthy development of macao. looking forward, amcm will implement its duty in accordance with the legislations to maintain the stability and security of the system, continue to enhance the financial regulations to cope with the needs of market development and alignment with international supervisory requirements. on the other hand, it will prompt the industry to further develop by actuating its practitioners. it will actively participate in regional financial cooperation, particularly the deepening guangdong - macao financial cooperation, with a view to exploring wider business scope and higher innovative vision. in this way, we can further exploit our bis central bankers ’ speeches special features and competitive edges to realize our own growth and development while contributing to the continued stability and prosperity of the macao financial sector and promote appropriate diversification of the economy of macao. again, i duly represent amcm to wish you progress in the year of the snake, good health, prosperous business and happy family. thank you. bis central bankers ’ speeches

composition of our balance sheet will make it challenging to execute smoothly. there are now more than $ 2. 4 trillion of excess reserves in the banking system. these reserves are not inflationary until they are converted to money and flow out into the economy. but as market rates rise in an improving economy, banks will find it advantageous to begin to increase lending or acquire assets using their reserves. the challenge for the fed is to control the flow of reserves so that we can successfully maintain our 2 - percent inflation target. this may require raising interest rates more quickly than currently anticipated. we have the tools that would enable us to raise rates if we chose to do so. however, the fed may be subject to political pressures or pushback from various interest - sensitive sectors that could result in a more measured response than required. one of the consequences would be higher inflation. history suggests that the fed tends to be behind the curve when it comes time to tighten monetary policy, and in the current environment, that delay could prove to be more costly than when reserves are in limited supply. thus, it ’ s a matter of our will rather than our ability. conclusion in summary, i believe that the economy is continuing to improve at a moderate pace. we are likely to see growth of around 3 percent in 2014. prospects for labor markets will continue to improve gradually, and i expect the unemployment rate will continue its decline to 6. 2 percent by the end of 2014. i also believe that inflation expectations will be relatively stable and that inflation will move up toward our goal of 2 percent over the next year. bis central bankers ’ speeches on monetary policy, the reduction in asset purchases from $ 85 billion a month to $ 75 billion a month is a step in the right direction. i believe the economy has met the criteria of significant improvement in labor market conditions for ending the program and that further increases in the balance sheet are unlikely to provide appreciable benefits for recovery. even after the asset purchase program has ended, monetary policy will still be highly accommodative. the work of the fed, however, is far from over. monetary policy still faces considerable challenges as we seek to normalize policy. the task should be to return to a framework in which a market rate is our primary policy tool, to reduce the size of our balance sheet, and to restore our portfolio to all treasuries. the challenge will be to do so in a way that ensures that inflation remains close to our target,