This means that the measures have probably achieved and are continuing to achieve greater demand for domestically-produced goods and services, higher employment and thus, ultimately, greater cost and price increases than we otherwise would have experienced. The monetary policy conducted last year can therefore be said to have contributed towards turning the development of inflation and inflation expectations around (see Figures 3 and 7). The positive effect of last year’s measures on inflation expectations is also suggested by the slight increase in what is known as inflation compensation – that is, the difference between the yields for nominal and real government bonds – in conjunction with the announcements of repo rate cuts and bond purchases that came as surprises. Standing prepared to make monetary policy more expansionary Inflation and inflation expectations are now higher than they were one year ago. But, over the autumn, the development of inflation was weaker than we predicted and the rise in inflation is still largely due to the krona being weak. If the rise in inflation is broken, confidence in the inflation target may be weakened. We are therefore prepared to do even more if it proves necessary to safeguard the inflation target. We still have many possible measures in our toolbox. Experiences from the past year suggest that cuts to the repo rate and repo rate path also work below zero and that purchases of securities form a good complement. We can do more in this style if we deem that inflation prospects are changing.
What I would like to say is that, in order to further facilitate Fintech development in Hong Kong, the HKMA has decided to launch two new initiatives today. Fintech Innovation Hub 14. First, I am pleased to announce that the HKMA will collaborate with the Applied Science and Technology Research Institute (ASTRI) to set up the “Fintech Innovation Hub”. It will be equipped with all necessary system and support resources to enable players of the banking and payment industry to conduct proof of concept trials of products and services through the use of new technologies, and do it safely – as this controlled environment is separated from their internal systems. Also, the Fintech Innovation Hub allows regulators to provide early inputs to the trial works before the actual implementation. While some of the largest banks have built their own laboratories, this new Fintech Innovation Hub will cater for the big and small institutions alike such that the industry as a whole would be able to adopt new technologies more speedily and in a more collaborative manner. 15. Among its potential uses, this Fintech Innovation Hub, as a neutral testing ground, will be ideal for two types of activities. First, industry players can test new Fintech solutions which involve the collaboration of multiple parties and are intended to be commonly adopted in the industry. A good example is biometric authentication.