18 % of gdp in 10 years ’ time. it is not difficult to get an idea of the potential scale of such flows by simply punching the calculator : this will give a good sense of why we say the potential is huge. 11. so, given the huge potential outward portfolio investments from mainland china, how will they be allocated across different financial markets? our internal research shows that, despite the advances in telecommunications and technology, home bias is still very much there, and people do like investing in markets closer to their home countries. as such, hong kong is likely to be one of the key destinations of mainland ’ s opi. apart from being the final destination for these investments, hong kong can also act as an ideal launch platform for these investment flows to reach other major global markets. 12. since the introduction of the qdii scheme, us $ 64 billion worth of investment quotas have been granted up to june this year. it is likely that a significant portion of these moneys is managed out of hong kong. in fact, over 40 mainland companies providing fund management, securities and futures, insurance, and other services have already established a presence in hong kong to manage the funds flowing out of the mainland and engage in fund advisory businesses. 13. so, the implications from the gradual liberalisation of mainland china ’ s capital account are clear. hong kong is bound to be a key destination as well as the management hub for the gradual increase in the portfolio flows from mainland china. this trend will present huge opportunities to financial institutions, private banks, fund managers, and other financial service providers looking to tap these funds. 14. having said that, one should expect that the process of financial liberalisation in mainland china will be a gradual and controllable one, in a manner that will fit the chinese saying of “ crossing the river by feeling the stones ” so that one can adjust the speed and tactics of crossing the river without fear of falling in and getting drowned. it is, however, important to realise that this process has already begun : this is something that global financial firms, especially asset managers, should not ignore in their business planning process. the wider external use of the rmb 15. rmb. now, let me move on to the second important trend : the wider external use of the 16. since the global financial crisis, mainland china has taken steps to allow a greater use of rmb outside the mainland. the rationale behind this policy move is easily understandable

make the most of that time? unfortunately, not to a sufficient extent. yes, considerable efforts have been and are being made, and results are already visible. institutions have considerably improved their solvency and liquidity. some institutions have made, and are continuing to make, considerable efforts to restructure. but in many cases, unsustainable strategies have not yet been sufficiently adapted. in this context, i regard the criticism of allegedly over - strict regulation, which has recently become acceptable again, as problematic. i often have the impression that eight years were enough to suppress the memory of the crisis of the century. the challenges associated with the new, improved regulations are not new burdens. on the 2 / 6 bis central bankers'speeches contrary, the fact that risky business operations are now less lucrative for institutions, that they have to manage themselves more sustainably and develop durable internal risk management, is the result of legacy issues from times when regulation was too lax. complaining about this confuses cause and effect and distracts from the actual problems faced by the financial system. 4. new challenges in the midst of the economic climate change not all institutions have to struggle with old pre - crisis legacies to the same extent. some of them were doing solid business even before the crisis. nevertheless, these institutions are just as vulnerable to the new challenges. and these challenges are massive. in many cases, the excessive debate about the details of digitalisation, the low - interest - rate environment or other future challenges overlooks the fact that we are in the middle of an economic climate change. since i don ’ t intend to send you to sleep, i will just address the four most important aspects of this from the point of view of banks : namely, the risk of an economic downturn, demographic change, the low - interest - rate environment and digitalisation. there is much talk at the moment about whether the era of ever - increasing economic prosperity in industrialised countries is over. 1 this is a complex debate which is likely to affect each society differently. the essence from the point of view of financial institutions is that we in germany are currently still experiencing relatively comfortable economic activity by international standards, but that this could definitely slow down in the foreseeable future. at the moment, it is difficult to predict whether this will happen. but from the point of view of the banking sector, it is important to bear in mind that the present, very comfortable economic situation and the low credit default rates associated with