Its implementation would entail far-reaching implications on a wide range of issues relating to areas such as legal, regulatory, policy, financial stability, privacy, cybersecurity, and interaction with existing payment methods. We also understand that e-HKD would be a critical and complex financial infrastructure project that may take years to complete. Therefore, we announced in September last year that we would adopt a three-rail approach to pave the way for possible implementation of e-HKD: Rail 1 aims to lay the technology and legal foundations for supporting the implementation of e-HKD. Rail 2 focuses on application research and pilots, and it runs in parallel with Rail 1. Rail 3 is concerned about launching e-HKD, which will depend on the actual progress made under Rail 1 and Rail 2, as well as the pace of relevant market development. This comprehensive three-rail approach will ensure that Hong Kong continues to play a leading role in the global financial landscape by getting ourselves ready as best as we can in terms of implementing retail CBDC. 1/3  BIS - Central bankers' speeches  e-HKD Pilot Programme Today's event marks the commencement of the e-HKD Pilot Programme, which is a key component under Rail 2. It is a tremendous opportunity for the HKMA to work with the industry to consider different use cases and design choices, and co-create new payment functionalities and infrastructures that could add value to society. We look forward to this public-private partnership in shaping the future of money in Hong Kong.
It is determined by the calibration of, and interaction between, the whole array of instruments we have introduced: the level of policy rates, the pace of asset purchases, and our forward guidance on both. It is the combination of all these tools that sets a given stance. The different elements have complementary effects on preserving the very easy financing conditions that are necessary for generating sustainable inflation convergence. Our current interest rate policy and our forward guidance on the future path of rates affect the risk-free term structure of interest rates, which is the benchmark for the pricing of all other assets and interest rates. Our asset purchases complement these interest rate policies by directly compressing the term premium and other risk premia, both via portfolio rebalancing effects and by underlining the central bank’s commitment to keep interest rates at a low level – i.e. signalling effects. And since the Governing Council deems the current stance fully appropriate, it confirmed at its last meeting that net asset purchases will continue until the end of December 2017, or beyond, if necessary, and in any case until we see a sustained adjustment in the path of inflation consistent with our inflation aim. It also confirmed its expectation that key ECB interest rates will remain at present or lower levels for an extended period of time, and well past the horizon of our net asset 5/6  BIS central bankers' speeches  purchases.