A few years ago, these ideas would have sounded difficult, but today we are edging ever closer to realising many of them, which is indicative of the rapid pace of change in the offshore RMB market. But as we all recognise, this will be a paced process and not something that would or should happen overnight. On this front, the HKMA has been engaging with Mainland Chinese authorities on further expanding fund flows between the onshore and offshore RMB markets. And I am pleased to say that significant progress has been made. Most recently, the quota for the RMB Qualified Foreign Institutional Investor (RQFII) scheme was expanded by RMB200 billion, bringing the total to RMB270 billion. The Qianhai cross-border lending pilot scheme was also launched, enabling companies incorporated in Qianhai to borrow RMB loans from banks in Hong Kong for uses relating to the development of Qianhai. I look forward to the further streamlining of policy arrangements so that all cross-border transactions currently settled in US dollars can have the option to be settled in RMB also. This in turn could be followed by the continued relaxation of cross-border flows of RMB into and out of Mainland China along with the liberalisation of China’s capital account. The relaxation of capital account restrictions, the expansion of the offshore RMB market, and an increase in the financial depth of the onshore markets can be mutually reinforcing and beneficial to the growth of the offshore RMB market.
So what does this all imply for monetary policy? First, barring a sustained period of economic growth so strong that the economy’s substantial excess slack is quickly exhausted or a noteworthy rise in inflation expectations, the outlook implies that short-term interest rates are likely to remain unusually low for “an extended period.” The economy can be allowed to grow rapidly for quite some time before there is a real risk that shrinking slack will result in a rise in underlying inflation. We will learn more as we go, and, as always, should be prepared to adjust course in a timely manner if incoming information suggests a different strategy would better promote our objectives. Second, the Federal Reserve needs to continue to communicate effectively about its objectives, the efficacy of the tools it has at its disposal to achieve those objectives, and the willingness to use these tools as necessary. This is important in order to keep inflation expectations well-anchored. If inflation expectations were to become unanchored because Federal Reserve policymakers failed to communicate clearly, this would be a self-inflicted wound that would make our pursuit of the dual mandate of full employment and price stability more difficult. If we consistently and effectively communicate our objectives and our strategies, we can avoid this outcome. Thank you for your kind attention. I would be happy to take a few questions. 4  As a byproduct of actions taken to combat the crisis, the Fed generated record net income in 2009 and 2010, and remitted $ billion to Treasury.