speeches 31 oct 2022 opening keynote at the hong kong fintech week 2022 eddie yue, chief executive, hong kong monetary authority innovation in action - looking back to look forward introduction 1. good morning, everyone. a very warm welcome to hong kong fintech week. 2. this is an exciting week for hong kong. for the first time in three years, we are welcoming many of our overseas friends to hong kong again for this fintech week and also the global financial leaders ’ investment summit and rugby sevens after that. this marks the beginning of our path back to normality, and all visitors can see and feel the vibrancy and dynamism of our city. 3. part of this dynamism comes from the fast - growing fintech ecosystem in hong kong. innovative fintech firms are exploring ways to drive the momentum towards an even more tech - enabled financial industry. many are looking at how to make use of the fastevolving blockchain protocols to create products or services through crypto, stablecoins, nfts, defi and the metaverse. 4. some financial institutions are already using elements of the metaverse for brandbuilding and customer education ; and it will be fascinating to see whether and to what extent the metaverse can form a new landscape for real - world financial activities one day. i hope the opening you just saw illustrates how the metaverse can mirror – and even improve on – reality. for example, my avatar definitely looks cooler, and is obviously a much better table tennis player than the real me. looking back 5. three years ago, at this same event, i said that technology adoption would be a bumpy road. of course, no one could have guessed how bumpy things would get, but for hong kong this journey has also been rewarding and fascinating. our fintech journey started in 2016, with the smart banking initiatives launched in 2017, and leading up to the “ fintech 2025 ” strategy we rolled out last year. 6. in between, we have introduced a faster payment system ( fps ), which now has 11 million registrations and more than a million transactions a day, and also eight virtual banks with 1. 7 million accounts and hk $ 25 billion in deposits, delivering innovative and inclusive products entirely through digital channels. 7. last week, we launched the commercial data interchange, or cdi, that makes financial data sharing between banks and data providers more efficient, so that borrowers, especially

a bit unfamiliar to many. 14. over time, it has become apparent that these innovations, in particular the technologies and business innovation underpinning them, are here to stay and will naturally develop in a healthy financial system like hong kong ’ s. they have the potential to improve efficiencies, reduce intermediary cost and promote innovation. 15. digital innovations encompass a wide spectrum of products and services beyond the commonly - known crypto - currencies. defi, given its composability feature, can inspire innovation in finance. take tokenised green bonds as an example. we concept - tested the idea with the bis innovation hub last year and are adopting it for an actual issuance later this year. when both bond and cash are tokenised and brought on - chain, all bond lifecycle events like asset servicing, trading and redemption can happen more efficiently in a distributed manner. it could even make possible real - time tracking of the green impact. 16. in addition to traditional financial assets, the blockchain technology also allows fractionalisation of asset ownership in art, real estate or other assets, creating new forms of financial intermediation. with radical open - mindedness, we can use technological innovations to make financial markets more complete and bring benefits for the real world. 17. now, wearing my hat as a regulator, a “ radically open mind ” does not mean that financial stability falls by the wayside. the use of digital innovations needs to be complemented by a clear approach to money laundering and financial risks. we continuously work with banks to achieve this. we also ensure that consumers and investors understand the risks associated with investments in these still - largely unregulated products. 18. to do this we need to put in the right guardrails. the basic principle is “ same activity, same risks, same regulation ”, such that digital assets performing similar functions to traditional products should be subject to similar regulations. this is exactly what we and other regulators in hong kong are doing. 19. the hkma is putting in place a risk - based and proportionate regulatory regime for payment - related stablecoins. the sfc is introducing a framework to regulate digital asset trading platforms. we have issued guidance to banks on what they need to watch out for if they wish to offer crypto - or defi - related services, whether for account opening or custodial services. 20. these guardrails will provide a solid foundation with a clear set