features ; buildings and warehouses with green accreditations ; and projects that focus primarily on energy transition and decarbonisation. going forward, we will continue to integrate esg factors into our investment framework, and seek to further expand our sustainable investments to ensure that we are on track to meet our net - zero commitment. also, we will continue to contribute to the international efforts in support of the global climate agenda. thank you for this opportunity to share with you our take on the current macro environment, the challenges we see and hkma's areas of focus on the investment front. i trust that you will have an enjoyable and successful conference. thank you. 1 the us headline inflation peaked in jun 2022 at 9. 1 %. 2 of the respondents in the omfif reserve managers survey 2023 3 based on the imf's forecast in jul, 2023 global economic growth for both 2023 and 2024 is expected to slow to 3. 0 %, down from 3. 5 % for 2022. advanced economies see a bigger decline in growth in 2023 to 1. 5 %, from 2. 7 % in 2022 while growth in emerging markets and developing economies is expected to stay flat at 4. 0 % in 2023 vs. 2022. 3 / 3 bis - central bankers'speeches

have utilized the market mechanism much sooner than it actually did, in response to the changes in the conditions surrounding financial industry. now, in order to catch up with the rest of the world, japan needs to accelerate this review of principles. the first concrete factor behind the delay in the review of principles was the inadequacy of the risk management systems of japanese financial institutions. during the “ bubble ” economy in the late 1980s, japanese financial institutions expanded their lending in pursuit of larger profits without satisfactory risk management systems. in retrospect, the insufficient scrutiny of the possibility of land price declines and concentration of loan exposure to the real estate - related industry were manifestations of the absence of basic credit risk management. during this period, major financial institutions overseas were in fierce competition to improve their risk management techniques not only for credit risk but also for market risk. the great damage japanese financial institutions suffered after the collapse of the “ bubble ” economy merely exposed their inadequate risk management. the second factor was the ineffectiveness of the market ’ s checks and balances, or put another way, the deficiency of a system that should encourage the working of this mechanism. one reason for this was the extremely cautious stance of the parties concerned toward disclosure. for example, the prevalent view until not so long ago was that disclosing the amount of nonperforming loans required careful consideration because it might destabilize the financial system. the accounting system and accounting practices have also tended to obscure the actual business condition of financial institutions. these increased the opaqueness of management of financial institutions and, contrary to the expectations of the parties concerned, spurred the deterioration in the credibility of japan ’ s financial system as a whole. the third factor was the monetary authorities ’ insufficient response to the changes in the financial markets. we had historically relied on detailed regulations and one - on - one guidance to financial institutions in maintaining the stability of the financial system. it is true that these methods had worked for a long time. however, it also seems that they allowed japanese financial institutions to be indifferent to risk management and to their own responsibilities, and encouraged their “ do - aseveryone - else - does ” philosophy. under this so - called “ convoy system, ” japanese financial institutions offered very similar financial services. it is a fact that there was little incentive to differentiate themselves from their rivals. there was no competition, and even if a financial institution developed a new product, the regulatory system tended to prevent the innovator profiting