norman t l chan : monetary policy ’ s effect on wealth distribution and a way forward for policymakers welcoming remarks by mr norman t l chan, chief executive of the hong kong monetary authority, at the hong kong monetary authority and federal reserve bank of new york joint conference, hong kong, 23 may 2019. * * * 1. good morning, president bullard, director hirtle, ladies and gentlemen. welcome to this conference jointly organized by the federal reserve bank of new york and the hong kong monetary authority. i would especially like to thank our overseas guests who have travelled a long way to be with us today. 2. over the past 40 years, the global economy has undergone impressive growth and transformation. from 1980 to 2018, ppp - adjusted real per capita gdp in advanced economies and emerging market economies have increased by 94 % and 205 % respectively1, driven by globalisation, open markets, technological advancements, and the general trend of falling inflation. 3. but the news is not all good. while the world economy has done well on the whole, economic inequality has widened noticeably at the same time. just take a look at the gini coefficient, which is a commonly cited measure of income inequality. in hong kong, the gini coefficient has risen steadily from 0. 476 in 1991 to 0. 539 in 2016, whereas in the us, it has increased from 0. 449 in 1991 to 0. 519 in 2015. 2 economic inequality causes social divisions, with the rise in populism especially in the us and europe being one of the unwelcome symptoms, and it also affects development and growth in the longer run. indeed, problems with income and wealth disparity have become so acute that it has recently triggered a debate on the “ crisis of capitalism ”. imf managing director christine lagarde, when presenting her global policy agenda at the imf spring meetings last month, also pointed out that the rewards of economic growth have not been shared, and called for a “ new multilateralism ” which will, among other things, foster inclusion. 4. with so much at stake, policymakers simply cannot brush aside the issue of the widening gap between the “ haves ” and the “ have - nots ”. over the past two years, i have been talking about, on different occasions, how globalisation, technological innovation and monetary policy may have affected distribution of income and wealth. today i wish to offer some further thoughts about

upkeep, but are critical for the firm in its daily operations. the current system contains inefficiencies and complexities, with many firms running on systems which were developed in - house by firms during the 80s and the 90s. many firms have run on the same systems over this time, patching and upgrading, whilst the environment we are operating in has developed, becoming bigger and more complex. there are obvious cost benefits in simplifying. but if you look at the kinds of innovation the sector has seen since it built the systems on which it runs, it is clear that there are also opportunities to take advantage of the benefits of new technologies and functions. as you would imagine, the bank is not immune from the needs of change and development, and we have been investing in our own plumbing. as a central bank, our portfolio varies in profile : from more the things you probably won ’ t see or hear about – such as a multi - year investment to simplify a complex web of six middle office valuation and operational control systems and over 60 interlinking system exports by introducing a single data management system, affectionately known as mosr ; to the things you definitely will have heard about ( not least because i have already mentioned it today ) – such as our ambitious and innovative renewal of the infrastructure at the heart of uk payments – rtgs7. change of course comes with risks and costs, and those need to be managed carefully. but it also offers potential in the long run to reduce costs, increase efficiency, and improve resilience. a more efficient post trade system could reduce settlement times and operational risks. in a world where, internationally, economies are growing and opening – resilient post - trade markets will need to service an ever growing sector of users. carney, m. ( 2019 ). a platform for innovation. available at : https : / / www. bankofengland. co. uk / speech / 2019 / mark - carney - speech - atinnovate - finance - global - summit - 2019 carney, m. ( 2018 ). new economy, new finance, new bank. available at : https : / / www. bankofengland. co. uk / speech / 2018 / markcarney - speech - at - the - lord - mayors - bankers - and - merchants - dinner - mansion - house ramsden, d. ( 2019 ). embracing fintech. available at : https : / / www.