environment, however, short - term interest rates, in the face of speculative attacks, rose at times to around double those for the us dollar. these spreads have virtually disappeared in recent months, testifying to the failure of those attacks to undermine the longer - term credibility of our exchange rate system. combined with cuts in us interest rates last autumn, nominal interest rates in hong kong now stand at or below pre - crisis levels. of course, real interest rates remain high, as prices have come down along with the sharp downturn in economic activity. but i believe that this process of price adjustment, although painful in the short run, demonstrates the flexibility needed to restore our competitiveness in the region, setting the stage for renewed growth in the period ahead. indeed, asset markets are already responding to signs that the worst of the downturn may be behind us, both here in hong kong and in the region as a whole. regarding the volume of financial activity in hong kong, domestic bank lending declined toward the end of last year, as corporate loan demand fell and banks reassessed risk factors. yet growth in bank deposits and the money supply recovered at the same time, perhaps reflecting a rise in household savings in a period of uncertainty. rising deposits and weak loan growth has left the banks well equipped to meet an expansion in loan demand during the recovery phase of the cycle, and market conditions overall seem now more conducive to corporate fund - raising. more generally, the sound position of our financial system as we exit the crisis is virtually unique in the region, and will be a key pillar in ensuring a return to sustained growth. a number of continuing issues, and new ones on the horizon, will provide the hkma with a heavy workload in the remainder of this year. these include : • the possibility of further attacks on the currency, despite the improved stability in local and world markets : we need to be constantly on our guard for signs of trouble. • further work to improve the currency board system, with the help of the efac sub - committee on currency board operations : much progress has been made in the past nine months or so, but this is an on - going process, and a number of ideas for refining the system are in the pipeline. • the rest of this year will continue to be somewhat difficult for the banking sector - but it remains as a whole in excellent shape to cope with the pressures ahead. • one of these pressures is the year 2000 problem. as this

for working very hard with us on this most meaningful collaboration. 4. hong kong and singapore are the two leading international financial centres in asia. both the hkma and mas are actively promoting the use and development of fintech respectively. there is considerable scope for the two places to collaborate and achieve a win - win outcome. a priority area of collaboration is the use of fintech in advancing the hitherto paperbased trade finance system that has been in use for as long as trade existed. as we know, trade finance is an integral part of the global trading system and the paper - based system is very inefficient and prone to human errors and fraud. but then it has proved to be very difficult for the trade finance processes to be automated or digitalised mainly because multiple parties and banks in different jurisdictions are involved in a single trade transaction. unless there is a common global standard for the digitisation of trade - related documents and a trusted central repository, it is pointless for any party or jurisdiction to change the paper - based system on its own. however, with the breakthrough of the distributed ledger technology ( dlt ), we firmly believe that the time has come for trade finance to move into 1 / 4 bis central bankers'speeches the digital era. together with a consortium of five banks in hong kong, the hkma conducted in the second half of 2016 a proof - of - concept project on the use of dlt to build a trade finance platform in hong kong. i am pleased to announce that the proof - of - concept project has been successful in that it can digitise trade documents, automate the processes, allow sharing of required documentation among authorised participants, and reduce human errors and risks of fraud. we are therefore moving into the next phase of the project by developing a full production system. the consortium, now joined by two more banks, is in the process of conducting tender for the system development. we aim to build an open system in which other banks in hong kong are welcome to join if they are interested. it is obvious that the new platform will create the highest value if the majority of banks engaging in trade finance businesses are making use of it. 5. however, this is only half of the story. as we all know, trade is by definition cross border and invariably involves parties and financial institutions in two or more jurisdictions. so it is not good enough for a jurisdiction to do it alone in digitalising trade finance. in this connection, i am pleased to