banks are subject to home - country control ). • contact with the intermediaries and markets subject to supervision — closest where supervision is carried out by means of a network of “ local ” offices, as in the united states and italy — gives supervisory authorities access to information and a power to discourage improper conduct ; • avoiding an accumulation of administrative power in an extremely delicate field limits the risk of its being abused or supervision being used, de jure or de facto, for political ends — the classical lesson of montesquieu. • in performing supervision it is important not to confuse the spheres of technical discretion and formal control of the conduct of business. the last reason needs to be clarified a little. disclosure, transparency and correctness fall largely, although not exclusively, within the second sphere. ensuring their respect implies, first and foremost, that rules must be detailed in advance in legislation and then that they must be enforced. it consists in administrative activities that are concerned less with the exercise of a natural and necessary technical discretion than with the discharge of a responsibility oriented primarily towards the control of legitimacy. competition, efficiency and proper risk control — i. e. stability — fall within the first sphere. the need to distinguish in a crisis between illiquidity and insolvency, assess the probability of contagion, and choose how and when to act so as to achieve maximum effectiveness and minimum moral hazard often requires supervisory discretion and hence the independence of the body responsible for carrying out what amounts to a form of economic policy. independence is inherent in the management of money and credit, which is entrusted to central banks. they are accustomed to exercising this independence in accordance with priorities they establish on the basis of the resources available. independence is the cornerstone of central banking. an additional reason for entrusting so - called stability - oriented supervision to the central bank is the scope for synergy between this function and the monetary policy function. far from being incompatible, these two functions are complementary, in at least three respects : staff ’ s experience and professional skills in the monetary, banking and financial fields ; the two - way flow of information ; and the risks facing individual intermediaries and the system as a whole. one last consideration concerns stability - oriented supervision and antitrust action in the banking industry. there is absolutely no trade - off between these two activities. competition is a necessary but far from sufficient condition for the solidity of the banking system. without competition, there cannot be efficiency. without efficiency, there

eddie yue : opening remarks - launch ceremony for project ensemble sandbox opening remarks by mr eddie yue, chief executive of the hong kong monetary authority, at the launch ceremony for project ensemble sandbox, hong kong, 28 august 2024. * * * good afternoon everyone, and a warm welcome to you all to the launch ceremony of the project ensemble sandbox. today's event marks a significant milestone in our journey towards creating a dynamic and innovative digital asset ecosystem in hong kong. i don't think it's an overstatement to say that we are living through a transformative era in the financial industry. the rise of digital money and new technologies is reshaping the financial landscape. the central bank community has responded with its own innovation efforts around central bank digital currencies, or cbdcs, which have the potential to underpin the new digital economy. since 2017, the hkma has been at the forefront of research and innovation on cbdcs, with projects like mbridge, which has recently reached the minimum viable product ( mvp ) stage, and e - hkd, which will commence its phase 2 pilot programme shortly. but we recognise that cbdcs will not, and should not, be the only force driving innovation. tokenisation, which like cbdcs often rides on blockchain technology, also provides the foundation for innovative pilots looking at how financial transactions can be conducted through the tokenisation of commercial bank money and both financial and real - world assets. tokenisation has the potential to make financial transactions more efficient, more transparent and less costly, and may represent the future of finance. today, i would like to outline the role that the ensemble sandbox is intended to play within the hkma's broader vision of cultivating a dynamic digital asset ecosystem in hong kong. project ensemble we launched project ensemble in march this year with the aim of supporting and advancing the development of the tokenisation market in hong kong. at the core of project ensemble are two key elements : collaboration and the sandbox. as the establishment of the architecture community shows, the project brings together industry participants, regulators and innovators to shape the future of digital assets. meanwhile, the ensemble sandbox is a new financial market infrastructure that facilitates the full life cycle of a tokenised asset transaction : from the creation and trading of tokenised assets, through payment and settlement using tokenised commercial - bank deposits, to final interbank settlement through cbdc issued by the hkma. 1