border settlement costs. having more mainland and international bond issuers will also promote development of hong kong's debt capital market by enhancing market depth and diversity. ladies and gentlemen, these are just some of the many pro - development initiatives hong kong is undertaking to keep us competitive. we are keenly aware that our efforts should be guided by the fundamental principles of maintaining a rules - based, robust, and transparent level playing field for financial institutions from around the globe. and proactive outreach and engagement with various stakeholders including isda will be an important means to achieve this objective. with that, i warmly welcome your views and ideas on ways to further improve the hong kong platform. finally, i would like to thank isda again for its continuous effort in supporting the development of the global derivatives markets, and the tremendous contributions to the hong kong derivatives markets. i wish the forum a great success. for our visiting guests, i hope you can find some time out of your busy schedule to explore what this vibrant city has to offer. thank you. 4 / 4 bis - central bankers'speeches

i am confident that, over time, our experience with unconventional tools will fill the remaining knowledge gap. one should not forget that the ability of central banks to bring high inflation under control was also doubted in the past, most famously in the 1970s, until empirical evidence put the debate to rest. but in the meantime, central banks have to demonstrate that there is no discontinuity when interest rates reach zero – unconventional measures can work as well as conventional ones. how unconventional monetary policy works why is this the case? conventional monetary policy operates by steering real money market rates below the prevailing equilibrium real rate, which in turn stimulates demand and inflation. bis central bankers ’ speeches but when the equilibrium rate is so low that the central bank cannot bring its policy rate sufficiently below it, the capacity to increase the degree of stimulus through moving short - term rates becomes limited. unconventional tools can, however, still be effective in these conditions. this is because, in reality, there is not just one interest rate which determines saving and investment in the whole economy. there is in fact a constellation of rates, which apply to different maturities, to different types of financial instruments, to different borrowers and lenders. so even without policy rates moving much, it is still possible for the central bank to stimulate the economy by lowering the level of all those interest rates. this can be effective in any circumstances, but particularly so when risk premia have risen due to market fragmentation or unwarranted uncertainties. reflecting this broader channel of monetary transmission, we have deployed a three - pronged strategy to inject additional stimulus into the euro area economy. first, our forward guidance allows us to lower longer - term rates by steering expectations of future short - term rates. having opened up the possibility that policy rates can turn negative has also contributed to flattening the whole yield curve, by removing the upward bias to yields that came from the perception that rates could only go up, not down. indeed, we have stated unambiguously that policy rates would remain at current levels or lower for an extended period of time. second, our asset purchases help us further lower yields across maturities and asset classes by compressing risk premia in the markets where we intervene. that in turn triggers portfolio rebalancing out of those markets and brings down borrowing costs across the whole constellation of rates, thereby producing broad stimulating effect. this is complemented by the negative rate on our deposit facility, which speeds up the process of