Hong Kong's economic growth softened to 1.9% in 2016
alongside subdued global economic and trade activities. The
labour market remained stable, with the unemployment rate
staying at a low level of about 3.4%. Headline inflation
moderated to 2.4%, reflecting easing pressures on domestic and
The Linked Exchange Rate System (LERS) continued to serve as
an anchor for Hong Kong's monetary and financial stability.
Despite a volatile external environment, the Hong Kong dollar
remained stable against the US dollar throughout the year,
reflecting the resilience of the LERS to external shocks.
The Hong Kong banking system remained robust with strong
capital and liquidity positions, as well as healthy asset
quality. In 2016, there was encouraging progress in legislative
work to further promote banking stability. The Deposit
Protection Scheme was optimised to streamline the pay-out
process with a view to further strengthening depositors'
confidence. The ordinance for establishing a cross-sectoral
resolution regime in Hong Kong was enacted to address the
systemic risks posed by financial institutions that are
In addition to prudential supervision, considerable efforts
have been made to promote financial inclusion to enhance the
accessibility by businesses and individuals to banking
services, improve the corporate governance of banks, and raise
the competency of industry practitioners.
As an international financial centre, Hong Kong is
constantly looking for new opportunities and exploring new
frontiers to enhance the competitiveness of our financial
Blessed with the unique advantages under the One Country,
Two Systems framework, Hong Kong maintained its lead as the
global offshore renminbi business hub with the world's largest
renminbi liquidity pool. The Shanghai-Hong Kong Stock Connect,
initiated in 2014, the launch of the Shenzhen-Hong Kong Stock
Connect last December and the impending launch of the Bond
Connect should add further impetus to the development of Hong
Kong's financial markets and will take Hong Kong's role as the
gateway to mainland markets to new heights.
The grand and visionary Belt and Road Initiative will
present Hong Kong with enormous opportunities. We have the
financial prowess, experience and expertise to play a pivotal
role in facilitating infrastructure financing, asset management
and risk management for projects along the Belt and Road. To
take full advantage of the opportunities, the Hong Kong
Monetary Authority (HKMA) established the Infrastructure
Financing Facilitation Office in July 2016 to provide a unique
platform for information exchange, experience sharing and
collaboration in infrastructure investment and financing. To
date, the platform has attracted more than 60 partners from all
over the world.
On fintech, several new initiatives have been introduced,
including the Cybersecurity Fortification Initiative to enhance
the cyber resilience of the banking system, the Fintech
Innovation Hub and the Fintech Supervisory Sandbox to
facilitate more speedy development and roll-out of new fintech
products and services by the banking sector. The HKMA also
launched a new licensing regime last year to promote the
further development of the retail payment industry while
safeguarding the interest of consumers.
Looking ahead, the global economy is still full of
uncertainties. We will remain vigilant and take timely measures
to maintain Hong Kong's financial stability. We will also
leverage on our strengths to enhance Hong Kong's
competitiveness as an international financial centre.