financial centre depends crucially on its soft powers, not just on hard infrastructure. hong kong is uniquely well positioned to take advantage and play a pivotal role in the new era of china ’ s growth story and in the internationalisation of rmb. hong kong enjoys both first - mover advantages as well as many irreplaceable structural advantages, given hong kong ’ s very close links with the mainland in trade, investment and finance under the “ one country, two systems ” principle. however, there is absolutely no room for complacency. as this new era of rmb internationalisation has just begun, we still have a long, long way to go as the offshore rmb markets continue to grow and mature, while the capital account controls in mainland china are being gradually relaxed or lifted. in the early stages of this new era, the primary task of hong kong is to develop the cnh market and at the same time work with other financial centres such as sydney, london or paris to grow the pie, leading to win - win outcomes. as we move into the more mature stages of the internationalisation of rmb, the available policy headroom should be quite ample for the markets to flourish. at that time, the 2nd and 3rd elements of pips, i. e. infrastructure and people / products, would matter a great deal more if hong kong wishes to retain its competitive edge over the others. it will be up to our industry, financial firms and market practitioners to out compete the other centres in terms of product innovation and distribution of various financial products and services that best serve the needs of their clients. i am sure that the tma, with the support of its members and the financial industry, will continue to play a leading role in developing the professionalism of the practitioners and in facilitating product innovation. thank you. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches

gross settlement system has registered a phenomenal growth, reaching an average of around rmb700 billion each working day. 4. i won ’ t bore you further with the numbers as i am sure you are very familiar with them. surely it is useful for us to pause, look back, take stock and try to think of ways in which we can continue to excel as we go forward from where we are. so without further ado, let me quickly turn to the main theme of my remarks this morning : “ what does it take to build a successful global hub for offshore rmb businesses? ” the key to success, if i may summarise it, lies in the acronym : “ pips ”. 5. “ pips ” stands for “ policy headroom, infrastructure and people / products ”. let me cover these three elements in the reverse order. for people and products, i have said many times that for any financial centre to thrive and out - compete other centres, the crucial building block would be its people and products. it goes without saying that a world class financial centre must have the right people designing and distributing the right products that serve the needs of the financial consumers. this is an important and core component of the soft power that i have been talking about in the last few years. it is a key attribute that differentiates a global hub from the other financial centres. people and products fall into the area in which the financial industry, including the individual firms, practitioners and industry bodies like the tma, can and should play a dominant role. i am sure that you will agree with me bis central bankers ’ speeches that policy makers and regulators, while having the responsibility to safeguard financial stability and to accord appropriate protection to financial consumers, are not really well suited to get too involved in gauging market demand and designing financial products that would best meet the requirements of the consumers. 6. having said that, policy makers and regulators do have a crucial role to play in respect of policy headroom and infrastructure, which are the first two elements of “ pips ”. let me elaborate further. 7. clearly there could not be any offshore rmb markets if the mainland did not make a move in 2009 to change its policy of not allowing the use of rmb in cross - border trade and other transactions. but of course, the mainland authorities were and still are understandably wanting to open up the capital account on an incremental basis, taking one step at a time