Communicating with the community

Effective communication helps manage risks in the monetary and financial systems.

My colleagues in the Communications Unit told me recently that I only needed another three Viewpoint articles to take me to the end of September when, as you all know, I shall retire from my appointment as Monetary Authority. My initial reaction was one of relief, given that this self-imposed commitment of one article a week, on top of the rather heavy workload and responsibility of the job itself, has at times proven to be somewhat demanding. But now I am beginning to feel that I am about to lose something special – an effective platform to communicate with the community – although there should not be a need for me to continue to communicate after retirement. And so for the first time in over two years, during which I had been anticipating retirement at the end of September 2009, it dawned on me how different life could be after retirement.

For public servants, communication with the community we serve is important, particularly when it concerns complex and technical issues that have an impact on everybody's livelihood. Effectively done, it promotes a much greater understanding by the community of the work we do. It also strengthens the credibility of the policies that we pursue as well as the credibility of the organisation and of the people responsible for the task. In the case of the HKMA, it strengthens public confidence in, and therefore contributes to the robustness of, the monetary and financial systems of Hong Kong.

With increasing globalisation and complexity in international finance, encouraged by financial innovation, there are risks in the global financial system that can easily have an impact on an open international financial centre like Hong Kong. These risks are not easy to identify and manage, not only for individual institutions or investors exposed to them, but also for the system as a whole. Over the years I have come to appreciate that one good way of managing risks for the monetary and financial systems is for the players to be alert to the nature of the risks and how they might materialise. Individuals acting to protect their own interests will hopefully lead to the risks at the systemic level being contained. I have therefore over the years used the Viewpoint column as a platform to get my views on emerging risks across.

There is of course a distinct possibility that I may be wrong in my reading of the situation and therefore every now and then be accused of being misleading. But in life perhaps the best we can strive for is not to be right all the time, but to be less wrong. It is much better to be cautious, even overly cautious, than to have to regret later overlooking important signals, not least because these signals are often not esoteric matters that are difficult to understand. I am sure we all realise that markets go down as well as up. Although the past may not always be a good indication of the future, there are lessons that we can learn from history, which does not have to repeat itself. It was for this reason that we insisted, for example, on limiting the exposure of the banks to 70% of the value of the property when extending residential mortgages. That is why we do not have sub-prime mortgages in Hong Kong and why a fall in residential property prices of 65% from 1998 to 2003 did not lead to a banking crisis.

Starting from 1 October I will no longer have the responsibility of communicating with the community on monetary and financial issues affecting Hong Kong. Whether this turns out to be a relief for me, or whether I will have withdrawal symptoms, only time will tell. For the time being, there are only two more instalments to go before closing this special chapter of my public service.

Joseph Yam
10 September 2009

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