In this context, in addition to the intensive work on the CTC project that I have just described, the HKMA is also busily working on a number of other market development initiatives. One of such initiatives that I wish to highlight today is our effort seeking to modernise the legal framework and tax treatment to make it attractive for private equity funds to domicile in Hong Kong. The objective of this project is simple: to strengthen Hong Kong’s leading position as a private equity fund hub in Asia. 8. Market development is a never ending race. It is not enough for us to be making good progress and improvements every now and then. We must be able to improve and move faster than our peers if we wish to stay ahead of the game. 9. Now that I am talking about ‘brand’, it should be no surprise to you if I now return to the theme of my first choice, “culture and ethics”. Just like any luxury goods, a brand in the context of IFC entails quality and credibility. Quality requires technical competence in a wide range of financial services, such as FX, interest rate, credit, hedging, derivatives, ECM, DCM, asset management, private equity, etc. I think Hong Kong is in a good position in all these markets. We have done rather well in all these markets and should be able to further deepen and broaden them given the exceptional opportunities emerging from the internationalisation of RMB and the latest Belt and Road Initiative.
Real disposable income in the United States, for example, has risen roughly 4% a year over the past two years. In addition, there has been considerable vigor in household demand. Indeed, the question is whether household demand is growing too quickly. In constant dollar terms, consumer spending grew more than 5% in 1999, the fastest rate since the mid-1980s. Housing has also been surprisingly strong, due to the best affordability conditions in a generation. In fact, the home ownership rate reached a record 67% in the second half of 1999. A number of commentators have expressed concerns that the United States cannot sustain these current measures of prosperity. To support their view, they point to the declines in recent years in personal saving rates. 1  BIS Review 29/2000  However, these declines in personal saving rates may be misleading in that they may be due in some respects to technical measurement issues, such as the exclusion of realized capital gains from the income and saving data. More relevant is the fact that household credit quality has not deteriorated over the past several years. On the contrary, it appears to be improving. Delinquency rates on mortgages and consumer installment debt have been falling, as have the number of new bankruptcies reported. Driving these positive trends, to be sure, has been strong growth in employment and income. At the same time, I cannot suggest that the Phillips curve - which holds that there is a predictable trade-off between achieving price stability and employment gains - is dead.