1. It is a great pleasure to be able to share the honour at this
evening's Euromoney awards dinner with so many excellent
recipients. And it is a particular honour to receive the award for
"Outstanding Contribution to Financial Markets". This is a
threefold honour. First, because it is
awarded by Euromoney, a publication - or rather an institution -
with a particularly strong relationship with central banks and
markets in this region. Secondly, because the
award is presented to the HKMA as a whole, as a recognition of the
hard work of staff from all parts of the organisation who have
helped develop financial markets. And thirdly, because the
award highlights an area of our work that usually receives less
acknowledgement than it should: the development of financial
markets not just through encouraging product innovation, but also
through laying down the infrastructure to enable markets to
function and grow.
2. It is, I think, entirely appropriate that this evening's
event is being held in a restaurant on top of the Star Ferry Pier -
as we are from time to time reminded by the swaying of the
structure and the occasional battering from the ferries themselves.
Transport links are a good analogy for financial infrastructural
links. They involve both local and international networks. They
make use of technology at many different levels: from traditional
cross-harbour ferry and metallic coins to advanced transcontinental
passenger planes and real-time electronic clearing. And usually
both transport systems and financial infrastructure receive
attention only when something goes wrong. Financial infrastructure
suffers the further handicap that it is largely invisible - a
matter of wires and electronic pulses - with none of the glamour or
nostalgia that physical transport can sometimes evoke. So, quite
understandably, the general public take it for granted - indeed may
not even be aware - that Hong Kong has for some time had some of
the most advanced, efficient and secure payment, clearing and
settlement systems of any financial centre in the world.
3. One of the responsibilities of the HKMA is to promote the
development of these systems in collaboration with dedicated
service-providers and the financial industry generally. In addition
to its responsibility for Hong Kong's domestic systems, the HKMA
also has a specific responsibility for promoting the development of
systems in Hong Kong that facilitate the safe and efficient conduct
of international and cross-border financial activities. We have
been paying special attention to this aspect of our work in recent
years in a way that has a very direct bearing on the development of
financial markets in the region. The foundation is the development
in Hong Kong of multi-currency clearing and settlement systems
operated on a real-time gross-settlement basis: so far we have
systems for the US dollar, the euro, and the renminbi, in addition
to the Hong Kong dollar; there is the possibility of replicating
this for any number of currencies, should the demand arise. To make
these systems available in Asian time to the rest of the region, we
are progressively linking them to other cities in China and with
other countries in the region: we established a link with Malaysia
in 2006 and have agreed with Bank Indonesia to establish a similar
link with Indonesia in 2010. I have no doubt that other links will
follow. In addition, through our Regional CHATS service launched in
July 2007, we have made available Hong Kong's own clearing and
settlement services throughout the region and beyond for
cross-border payments. By June this year, 30 banks in Hong Kong had
registered as service providers for services covering over 2,000
payment beneficiary points in 42 economies.
4. These are examples of how we are helping to build the
hardware, or - to use the transport comparison - laying down the
roads, tracks, junctions and interchanges, for regional financial
markets. For the software and the actual traffic, it is of course
the case that in a free-market economy such as Hong Kong's there is
a limit to how much the government should take the lead.
Nevertheless, there is much that the government can do to
facilitate financial-market development by clearing the way,
particularly where this involves markets of a regional nature.
Three areas of work in which the HKMA - with various partners - is
taking an active role are worth citing here. The first involves the
gradual introduction and expansion of renminbi business within Hong
Kong, which requires primarily co-operation between the Mainland
and Hong Kong authorities at various levels, including both
political and technical. The second example is our collaboration
with other central banks in the region, under the auspices of
EMEAP, on the Asian Bond Fund, which is intended not just to
encourage business in the debt market, but also to stimulate
regulatory reforms in economies in the region. The third example is
our work in encouraging the development of Islamic finance in Hong
Kong, through ensuring a level playing field, stimulating interest
in Hong Kong among Islamic countries, encouraging product
development, and raising market awareness within Hong Kong,
particularly through the educational work of the Treasury Markets
Association.
5. All of this work looks both to the past and to the future for
inspiration. Looking to the past, we have the still-recent
experience of the Asian financial crisis, one element of which was
the undeveloped state of some of our financial markets, in
particular the debt market. Many of the market-development
initiatives on which we have been working have been intended to
address these deficiencies. More recently, the current financial
crisis serves as a reminder that some aspects of market development
may be taken too far, where, for example, they privilege the
process of intermediation and neglect the financial and economic
realities that lie behind it. The caution inculcated by the Asian
financial crisis, and a natural conservatism in many markets in
this region, seem to have helped us avoid the worst excesses we
have seen in more developed markets.
6. Looking more positively to the future, this region is poised
to become the centre of economic growth and wealth creation in the
world. Indeed we are already a long way down that path. So far, a
great deal of the wealth created has been diverted into markets
elsewhere in the world. Market development in this region, on a
foundation of efficient infrastructure and sound regulation, will
help retain more of that wealth for investment within the
region.
7. This evening's gala event celebrates the 40th
anniversary of one of the world's foremost financial publications.
It is therefore only proper to say something about the vital role
of the media in financial market development. The media can, I
think, be seen as a kind of complementary, parallel infrastructure
to the financial infrastructure that I have briefly described. The
media are, of course, more visible, and much more diverse, but they
also make use of similar technologies, whether advanced or
traditional, and at various points they intersect with the
financial infrastructure. Modern markets are, in fact, dependent on
the media, whether in their provision of real-time information
second by second, or in the more reflective analysis of market
trends, or in the exposure of scandals and malpractices.
8. It is no coincidence that Hong Kong is both a financial
centre and a world media centre. At least seventeen international
news agencies, 29 international or regional newspapers, and another
29 magazines have a presence in Hong Kong, and all of them have
some interest in financial affairs. We have 45 daily newspapers
printed in Hong Kong and no fewer than 661 registered periodicals.
Now, of course, some of these publications are what are known as ma
ging (馬經) or racing papers, and not all of them have their
dedicated financial pages. Even so, Hong Kong is remarkably well
served by the financial media, and one thing that has never ceased
to impress me during my sixteen years as Monetary Authority has
been the quality and dedication of the many people in Hong Kong who
make up the financial media. The many colleagues in the media play
an extremely important part in the development of financial
markets, and I should like to pay tribute to their
professionalism.
9. I feel entitled to use the word "colleagues", not just
because I have enjoyed a very close and productive relationship
with the financial media, but also because I too, albeit uninvited
and unpaid, have for the past 11 years served as a columnist in
several newspapers through my weekly "viewpoint" articles. I should
like to thank those newspapers who have faithfully reproduced these
articles, week after week, even when the content may not always
have been as newsworthy as they may have hoped.
10. Ladies and gentlemen, this evening's gala dinner, in
recognising excellence in financial services will provide
encouragement for the future development of financial markets in
the region. It is also an opportunity to celebrate Euromoney's
40th anniversary and its long association with Hong Kong
and this region. I should like to offer Euromoney heartiest
congratulations on its birthday and the very best of wishes for a
flourishing future.
