Rather, because of the difficulty of making individual credit assessments and the probably relatively high transaction cost facing the small investor, he is more likely to have indirect exposure to the debt market through collective investment schemes, pensions, etc, or to keep money in a bank deposit while the bank invests in debt instruments - a growing feature of bank balance sheets nowadays as an alternative to conventional lending. Mandatory provident funds are one example of such collective arrangements, and their advent in Hong Kong may be expected to add to the demand for good quality debt instruments. The prospect of an additional channel of demand should to some extent stimulate interest in issuance from the supply side. In sum, there are many opportunities for innovation and development in our debt markets. I have mentioned rating agencies, credit enhancement, more varieties of asset-backed securities, potential for more channelling through collective investment vehicles, the important though perhaps modest role of the direct retail investor, opportunities relating to MPFs, and so on. These are, by and large, activities for players in the banking and finance industry to follow through themselves if they see the commercial justification. I am sure that at least some of you here today are already giving attention to at least some of these topics. I hasten to add that not every bright idea necessarily results in a viable business proposition.
However, we cannot rule out that, given the good numbers of recent quarters, we see a faster recovery of developed economies. In the emerging world, the main source of risks continues to be the Chinese economy. Despite good first-half results and policies implemented, doubts persist about imbalances in a number of Chinese markets. There is also the uncertainty surrounding the path that the reforms agenda will take once the Chinese Communist Party Congress concludes. In Latin America, the landscape has not changed much and political risks remain the main source of uncertainty. The copper price surpassed $ per pound at the statistical cutoff, but the baseline scenario assumes that it will stand near $ during the next two years. Should the present price last, it would have positive effects on domestic activity and expenditure. At the same time, it could strengthen the peso and lower short-term inflation. The implications for monetary policy of such a scenario are not straightforward. Although in the short term inflation is reduced, the greater dynamism of the economy could imply a somewhat faster closure of the activity gap in the projection horizon. This crossroads, in a way, reminds us of the sharp peso depreciation between 2013 and 2015. In those days, when the exchange rate accumulated an increase of around 45%, annual CPI inflation was above 4% for several quarters. At that time, monetary policy did not react to this increase in inflation by raising the MPR, understanding that it would have a significant but transitory effect on prices.