bond markets in the asian region. 9. the next, bigger step was abf2, which extends the concept to bonds denominated in asian currencies. there are two parts to this : the pan - asia bond index fund ( paif ) and eight single - market funds. the paif is a single bond fund investing in sovereign and quasi - sovereign local currencydenominated bonds issued in the eight emeap markets, while the single - market funds invest in similar bonds issued in the individual markets. so far, the paif and three single - market funds in hong kong, malaysia and singapore have been listed. the remaining five single - market funds will also be offered to the public within the next couple of months. i am glad to see that the abf hong kong fund has been well received by the market, growing by over 40 % since its listing in june this year. 10. the abf2 project has been a good example of co - operation between the public and private sectors. while this is an official initiative with seed money of us $ 2 billion provided by the emeap central banks, we relied on the private sector for product design, implementation and marketing. the nine fund managers and the global custodian for the nine funds were selected based on a very competitive process. after all, the private sector is much better at making these products marketoriented than central bankers. 11. the abf initiative has also been successful in a wider sense in a number of ways. first, it has helped to promote product innovation. abf2 funds by themselves represent a new class of bond products, which has helped to raise the awareness of asian bonds among investors. some abf2 funds take the form of a bond exchange - traded fund ( etf ), which is the first of its kind in asia. they are a convenient and cost effective way for regional and international investors to gain exposure to asian bonds. with their low costs and low entry thresholds, the funds also facilitate retail participation in bond markets. abf2 has also led to similar products and derivatives coming into the market. we notice that some banks have come up with their own asian bond funds, a welcome development, while an investment bank has issued a structured note using paif units as the underlying asset. 12. second, abf2 has led to improvements in financial market infrastructure. the iboxx abf indices, the benchmark indices for the abf2 funds,

norman t l chan : hong kong ’ s positioning in the post - qe era speech by mr norman t l chan, chief executive of the hong kong monetary authority, at the hong kong economic summit 2016, hong kong, 7 december 2015. * * * accompanying charts can be found at the end of the speech. distinguished guests, 1. when central banks, such as the us fed, cut short - term policy interest rates to near zero and created money on a massive scale to purchase bonds and other financial assets, we called it quantitative easing ( qe ). 2. it has been more than six years since the launch of qe in 2009. after spending a total of us $ 3. 9 trillion to purchase bonds, the fed wrapped up its asset purchase programme in october 2014. in 10 days ’ time, the fed will decide whether to lift interest rates. if it does, it will signal the beginning of the normalisation of us interest rates. “ qe ” ineffectual? 3. at the end of 2009, i initiated a guessing game with several chief economists from major commercial and investment banks. the question i asked was when they expected the fed to exit from qe. most bet on the second quarter of 2010 or earlier. the most dovish of them said q3 2010. as we all know now, these guesses were wildly off the mark. to be fair, i don ’ t think anyone expected the us recovery to be so slow and sluggish. 4. indeed, after the global financial crisis, the us suffered its worst recession since the great depression of the 1930s. in a desperate bid to stave off the recession, the us literally moved mountains, including introducing the unprecedented qe policy and splashing out us $ 1. 8 trillion between 2008 and 2010 to cut taxes and implement other fiscal policy measures to prop up the economy. however, as we can see from chart 1, the current recovery has been the weakest of all the economic cycles in the past 55 years. the average growth rate is just 2. 2 %, half the average rate of 4. 6 % in the previous recovery cycles. ( chart 1 ) 5. as for employment, the us has lost a total of 8. 7 million jobs during the financial crisis and recession, with the unemployment rate peaking at 10 %. although employment bottomed out in 2010, and some 13 million jobs have been created since then, this only represents 4. 3 million more jobs