BIS central bankers’ speeches  5  Given our choice of the level for the key policy rate, the deviation from the inflation target will be somewhat larger and economic developments somewhat weaker in the short term than would otherwise have been the case. This cost can be regarded as an insurance premium against future adverse outcomes. The gains that we can achieve are that a downturn will be less pronounced should the economy be exposed to negative shocks. In addition, we can reduce the probability that imbalances trigger a crisis. The expected path for inflation and output becomes more stable. The size of the gains is uncertain. Developments in debt and house prices depend on a number of factors in addition to the interest rate. The extent to which the interest rate influences the build-up of imbalances may thus change from one situation to another. Even in retrospect it will be difficult to measure the gains. The size of the insurance premium will also vary. When inflation has strayed far from the target, the prospect of a further deviation will be given more weight than when inflation is close to the target. It is generally agreed among central banks that monetary policy must in certain situations take into account the risk of a build-up of financial imbalances. At the same time, Norges Bank has been one of few central banks where this consideration has played a clear role in interest rate setting in recent years.
Cybersecurity is the very foundation of modern banking and without it there is no point for us to boast Hong Kong as a world class international financial centre. While banks in Hong Kong have so far had very few incidents of serious cyber attacks, there is no place for complacency if we wish to maintain Hong Kong’s competitive edge as the preferred financial hub in Asia. In this connection, the HKMA has earlier this year set up a new Fintech Facilitation Office, which has taken cybersecurity as its top priority mission. Having worked very closely with the banking industry and other stakeholders, I am very pleased to announce today that the HKMA has decided to launch for the banking system a “Cybersecurity Fortification Initiative”, which is known as “CFI” in short. The CFI consists of three pillars: (a)  a Cyber Resilience Assessment Framework;  (b)  a Professional Development Programme; and  (c)  a Cyber Intelligence Sharing Platform. Let me elaborate on these three pillars. Cyber resilience assessment framework 5. We have about 200 banks in Hong Kong and they have a very diverse range of business models with understandably very different channels and modes of service delivery. Depending on the ways and technology platforms in which their businesses are conducted and delivered, the risk or vulnerability to potential cyber attacks varies from bank to bank. Needless to say, the volume and value of banking transactions conducted through the cyber world also matter a great deal.