In addition, we have been active internationally – both bilaterally and multilaterally to ensure we have a coordinated, well-informed and mutually supportive approach. This includes our work as a member of the Financial Stability Board. So, while there are challenges, we are very much alive to them. We monitor the risks closely and work continuously with our partners to prepare, and stand ready to take any appropriate action. Opportunities for Hong Kong Having acknowledged the immediate challenges, I think it’s time now to turn towards the opportunities, above all in this region. For while the challenges from the West are deep, they should not blind us to the opportunities within Asia. I would say that the coming opportunities for the banking industry here are bright – even if at times they may appear to be obscured by clouds abroad. In fact, I believe that they put us on the threshold of a new era for the banking industry in Hong Kong. I would like to highlight two of the most promising opportunities. The first is the offshore RMB market, which has developed rapidly over the past two years. The second is the increasing demand for asset and wealth management services, both institutional and individual. Opportunity 1: offshore RMB market On the offshore RMB market, Hong Kong bankers have been the first ones to exploit the new business opportunities.
From time to time, we meet with stakeholders across the value-chain to gather practitioners’ views as to what the market needs in order to develop further. We will continue our work in this regard. Private banking One area we know we can improve is private banking. This is a business area that is growing exponentially in the region. According to industry research, Asia-Pacific has accounted for half the growth in global wealth from 2010 onwards. It also has a fifth of the world’s millionaires. And these numbers will get bigger, with global wealth expected to rise 50% by 2016. So, the opportunities for our region are enormous. We must ensure we have a regulatory framework that recognises this, one that is user friendly to private banking clients, yet sufficiently robust to provide appropriate investor protection, as well as being on par with international standards. To achieve this, we’ve recently introduced some refinements to our regulatory arrangements, following consultation with the industry. These measures were announced in June, so I’d just like to very briefly recapitulate four of the key points as follows. First, while we want to ensure appropriate protection to all investors, it is reasonable to treat private banking and retail banking clients differently in the investment process. So the first change is that we have provided an expanded definition for “private banking customers” that caters much better for the operational needs of private banks.