There are three ways we can achieve this: The first is by enhancing offshore RMB liquidity. As mentioned earlier, the HKMA’s currency swap agreement with the People’s Bank of China was enhanced in July. Apart from the overall increase in the size and removal of the need for renewal of the swap agreement, on the back of this, the HKMA enhanced its RMB Liquidity Facility, and the important changes include: Expansion of both intraday and overnight repos from RMB10 billion to RMB20 billion each, providing an additional RMB20 billion in liquidity to the market; Extension of the overnight repo operating hours from 6 pm to 5 am the next day (when the RMB RTGS system closes), making operation more flexible and streamlined, especially for those in other time zones; and Reduction of repo rates of the overnight repo, with the spread over CNH HIBOR lowered from 50 to 25 basis points. We will constantly monitor the need for further enhancements to keep RMB liquidity in Hong Kong at the optimal level. The second approach is to facilitate the development of more diverse offshore RMB products. The expansion and enhancement of the Connect schemes to promote the cross-boundary use of the RMB and facilitate further portfolio flows into and out of the Mainland is crucial. Southbound Trading under Bond Connect and Wealth Management Connect have created new opportunities for investors and increased the usage of the RMB in capital markets and wealth management. We will consider enhancements to Southbound Bond Connect to enrich Hong Kong’s bond market.
While these initiatives bode well for inclusiveness, the government must be careful not to excessively gear government spending towards populist policies that eventually add financial burden to the already-tight budget and sovereign debt in the future. In particular, it is important that the government prioritize and balance between public consumption and public investment accordingly. More importantly, efficient management with good governance will be the key ingredients to policy success in this regard. For our part, the Bank of Thailand has also put inclusiveness as one of the main agenda in the Financial Master Plan II, other than efficiency and provision of financial infrastructure. The objective is to provide financial access for all, particularly to the underserved, in an efficient and financially viable manner without compromising financial stability and prudence. This is still an on-going process which we are committed to. Ladies and Gentlemen, Before ending my talk this evening, I would like to address some of the concerns raised by Japanese corporations in Thailand, as reported in a survey from JETRO (Japan External Trade Organization). The key concerns include political stability, development of customs-related system and human resource development. On politics, I have good faith that the upcoming election is another important step towards political stability, while commitment to improving inclusiveness mentioned earlier would bring a long-term solution to the country.