peter pang : policies adopted by authorities in different jurisdictions with respect to international reserves welcoming remarks by mr peter pang, deputy chief executive of the hong kong monetary authority, at the international monetary fund independent evaluation office ( ieo ) / hong kong institute for monetary research ( hkimr ) workshop, hong kong, 24 march 2011. * * * it is a pleasure to welcome all of you to this event co - hosted by the hong kong institute for monetary research ( hkimr ) and the independent evaluation office of the imf. the hkimr, as some of you already know, is a subsidiary of the hong kong monetary authority. its objectives are to promote research on longer - term and wider policy issues of relevance to the monetary and financial development of hong kong and the asia region ; and to foster cooperation and cross - fertilisation of research efforts between academics, international financial institutions and the hkma research activities. for this reason we are particularly pleased to co - sponsor this workshop which deals with the important topic of policies adopted by authorities in different jurisdictions with respect to international reserves and with the advice the imf gives in this regard in its consultations with policy authorities. the accumulation of international reserves has become one of the issues at the center of debates about the functioning of the current international monetary system as well as about reforms of this system. one lesson that authorities in this part of the world drew from the financial crisis in the late 1990s was that strong policy fundamentals are not always enough to guard against the vagaries of international capital flows. a sizable cushion of international reserves is important as a buffer to guard against sudden changes in market sentiments that can lead to capital outflows and pressures on the currency. starting shortly after the asian financial crisis reserves were thus accumulated in the region to build up such buffers. but holding large amounts of reserves is of course costly as they are typically invested in highly liquid assets with relatively low yields compared with some alternative uses of the funds. it is partly for this reason that authorities in the region have taken steps to create a mechanism for pooling some of their reserves in the form of the chiang mai initiative which started in year 2000 and its multilateral extension which was agreed on in 2010. while the size of the pool of reserves under the chiang mai agreement is relatively modest compared to the potential needs for some of the larger economies in the region, the importance of the agreement goes far beyond the aggregate amount of reserves involves. it reflects a desire by authorities in

means you raise deposits online and make loans online. the first part is easy ; the second part is not so easy. in our culture, apparently, you need a human being to collect on loans, but nonetheless, we are hoping digital banks can figure this out. and a couple of them are figuring it out. 3 / 7 bis - central bankers'speeches they are six now. we are limiting the number of digital banks to six licenses, but we are looking very closely at the industry and are going to decide if we are going to open it up again. maybe we can attract different business models and make the industry more exciting. we also have a regulatory sandbox. the regulatory sandbox means you try your innovation, do a proof of concept, and do a pilot, but when you do that, you work with a regulator. the regulator is there to help you and tell you what the regulatory implications might be if you succeed. we are not there to judge whether you will succeed or not. we are just there to help you. if you grow, you know what you are getting into regarding regulations. it is about minimizing regulatory uncertainty. if you have a new idea, enter a sandbox. we will assign you a regulator. we will scold you, oh bawal'yan, but that is for your own good. then, of course, there is generative ai [ artificial intelligence ]. that is inevitable. if you have used chatgpt, you know how irresistible it is. so, we do not even have to encourage it. you guys will do it without any encouragement, but of course, we have to think of guard rails for generative ai. as you know, generative ai leads to what we call hallucinations ; it imagines things that never happened. it leads to herding ; it gives the same answer to different questions. so, we think that, for now, at least, when using generative ai, a human being should work with it and look at the answers before you decide. apparently, it is not so hard to tell whether the answers are wrong. if you teach at ateneo or smu and take a take - home exam, you are almost sure the student will use ai. a student who does not use ai is not a good student. but apparently, it is easy to tell. when the homework comes in, you look at it, and you will know whether ai is used. the point