Yet the press and the markets focus on them as though they were the writ of all-knowing, all-seeing monetary sages. On Monday night, for example, there was much ado made about Janet Yellen noting in Chicago that the central tendency of our best guesses was that full employment would be somewhere between a 5.2 and 5.6 percent unemployment rate. It is nonetheless helpful to contemplate what may be useful guideposts for deciding when to raise the base rate and how we may convey this to the markets. And so the FOMC is grappling with just what, in fact, we can provide the marketplace in the form of forward guidance about our future modus operandi. 4  Monty Python is the British comedy troupe known for its satirical skits. A parody about the FOMC’s “dots” could rank up there with the spoof about the argument clinic “intended to create grievous mental confusion among the general public.” A link is provided here for your enjoyment: www.youtube.com/watch?v=kQFKtI6gn9Y. BIS central bankers’ speeches  3  Odysseus or Apollo? Research papers have addressed this subject. For example, some academic economists draw on Greek mythology to distinguish different techniques for crafting forward guidance, making a distinction between Odyssean and Delphic forms of guidance. The Odyssean model involves committing to a policy rule or to a criterion for choosing between different policy alternatives.
We are also noticing the inevitable trends, on the one hand, of greater use of the Hong Kong dollar on the Mainland and, on the other hand, of continuing financial liberalisation on the Mainland: this will, in the fullness of time, culminate in the RMB becoming freely convertible. The subject of dollarisation, whether the predominant currency is the Hong Kong dollar or the RMB, is a fascinating one. On a different dimension, in our attempt to enhance our status as an international financial centre, we have adopted the strategy of providing a financial infrastructure to facilitate the conduct of international financial intermediation activities in Hong Kong. This financial infrastructure is characterised by a platform on which financial activities can be transacted and settled real time in this time zone in the major currencies without, for example, Herstatt risk. We now have Real Time Gross Settlement systems for the US dollar and the euro, and of course the Hong Kong dollar. And the lead-time for the inclusion of another currency, such as the RMB, in our settlement platform, if that is considered appropriate, could be as little as six months. If this strategy is successful, it is not difficult to envisage an increasing proportion of the balance sheet of the banking system denominated in foreign currencies, and the greater use of, say, the US dollar in both the equity and debt markets.