banks and securities broker - dealers that trade in u. s. government securities with the federal reserve bank of new york. on behalf of the federal reserve system, the new york fed's open market desk engages in the trades to implement monetary policy. measures that will serve over time to strengthen the primary dealers, other financial institutions, and the overall financial system. as i will discuss, these measures include working with the sec and the primary dealers to increase the firms'capital and liquidity buffers and cooperating with other regulators and the private sector to help make the financial infrastructure more resilient. prudential regulation and supervision in general, our system relies on market discipline to constrain leverage and risk - taking by financial firms, supplemented by prudential oversight when government guarantees ( such as deposit insurance ) or risks to general financial stability are involved. however, the enormous losses and writedowns taken at financial institutions around the world since august, as well as the run on bear stearns, show that, in this episode, neither market discipline nor regulatory oversight succeeded in limiting leverage and risk - taking sufficiently to preserve financial stability. working collaboratively with regulators both here and abroad as well as with the firms themselves, the federal reserve has redoubled its efforts to strengthen the capital positions, liquidity reserves, and risk - management practices of the institutions for which we have supervisory responsibility, including bank holding companies and statechartered banks that are members of the federal reserve system. shareholders, managers, and investors are likewise taking steps to protect their interests in a period of continued market strains. from a regulatory and supervisory perspective, the investment banks and the other primary dealers raise some distinct issues. first, as i noted, neither the firms nor the regulators anticipated the possibility that investment banks would lose access to secured financing, as bear stearns did. second, in the absence of countervailing regulatory measures, the fed's decision to lend to primary dealers – although it was necessary to avoid serious financial disruptions – could tend to make market discipline less effective in the future. going forward, the regulation and supervision of these institutions must take account of these realities. at the same time, reforms in the oversight of these firms must recognize the distinctive features of investment banking and take care neither to unduly inhibit efficiency and innovation nor to induce a migration of risk - taking activities to institutions that are less regulated or beyond our borders. since march, the federal reserve has been working closely with the sec

and tested elements of a rules - based system that offers a level playing field for market participants from all over the world. our world - class universities continue to produce outstanding professionals who are highly competitive by any standard. hong kong is also a magnet for talented people from all corners of the world. they are attracted not just by work opportunities but also by our cosmopolitan lifestyle, by our thriving cultural – and culinary – scene, and by the spectacular country trails and fine beaches that are so close to the bustle of city life. crowning all of this is hong kong ’ s geographical and historical role as the gateway that connects china and the rest of the world, and the enormous opportunities that this brings. this is, i think, 1 / 4 bis central bankers'speeches the defining feature that firmly positions hong kong as the leading ifc in the asia time zone. resilience resilience is the bedrock of an ifc. in the past quarter - century, hong kong has been exposed to a series of crises that have severely tested our financial system — the asian financial crisis, sars, the global financial crisis, and more recently the triple whammy of social unrest, geopolitical tensions, and covid - 19 pandemic. through all of these crises our financial system has emerged stronger. take the monetary system. the linked exchange rate system has remained rock solid throughout these testing times. indeed, market confidence in the system has only strengthened over time. at the height of the triple whammy that i just mentioned, we saw continued inflows into the hong kong dollar, pushing our exchange rate to the strong side of the conversion zone. speculators betting against the hong kong dollar learned a hard lesson. our banking system is sound and safe, despite a challenging operating environment : capital and liquidity levels remain well above global standards ; loan quality and profitability compare favourably with global peers. we do not take this for granted. we are keenly aware that hong kong as an ifc plays an outsized role not only in supporting the local economy, but also in underpinning trade and investment activities across the region. our banking assets are 9 times our gdp ; the equity market 16 times ; and assets under management 13 times. hong kong is the largest us dollar funding centre in asia, and is second in the world only to london and new york. in a highly interconnected global financial system, where so much depends on the stability of ifcs, we strive