To protect the money in the stored value facilities, we propose that such float must be kept separate from the licensee’s other funds, and the float must be adequately protected by safeguarding measures, such as a bank guarantee or a trust account. 27. The proposed legal framework will also empower the Monetary Authority to designate major retail payment systems, such as global credit card schemes, to be put under its supervision. The designated systems would be subject to requirements such as risk management and control procedures relating to their operations, and measures to ensure the safety and integrity of customer data held in the system. 28. We believe the proposed legal and regulatory regime will foster the healthy development of m-commerce in Hong Kong. Results of public consultation conducted last year indicate that there is general support of the proposed regime by the key stakeholders. We aim to introduce the relevant bill into the Legislative Council in the next legislative session. V.  Conclusion  29. As the theme of today’s event suggests, the potential of m-commerce is there for all to tap with innovation, and I am sure there is plenty to tap by users and service providers. 30. The HKMA will continue to monitor market developments and, when appropriate, facilitate the industry efforts in harmonising the technical and safety standards. We will also ensure that the regulatory framework is effective in protecting consumer interests and maintaining financial stability. 31.
An important outcome is shown in this chart. The chart compares two different paths for consumption during a recession. The blue line shows the average path, while the yellow line shows the path following a period of high debt growth. The results confirm that high debt growth ahead of a recession leads to a deeper downturn. It also takes longer for the economy to recover. 3/5  BIS central bankers' speeches  Chart: Monetary policy and financial stability When financial imbalances are building up, the probability of a deep recession may increase. This is illustrated in this chart by the blue lines. The uncertainty bands around inflation and the output gap are highly assymetrical. Monetary policy can dampen vulnerabilities by keeping the interest rate somewhat higher than would otherwise have been the case – in other words, by “leaning against the wind”. This policy is illustrated by the red lines. By keeping the interest rate higher, the risk of a deep economic downturn is reduced. The uncertainty bands are more narrow and symmetric. But this policy also entails a short-term cost: capacity utilisation is lower, and inflation may stay below target. The aim of “leaning against the wind” is to achieve an improved path for inflation, output and employment over time. This is in line with our central bank mandate. Flexible inflation targeting with a sufficiently long horizon should take financial stability into account if the situation so allows and so warrants.