Opening Remarks at the Fifth Hong Kong Monetary Authority Distinguished Lecture: "The Asian Crisis: Lessons for the Future"
Speeches
21 May 2002
Opening Remarks at the Fifth Hong Kong Monetary Authority Distinguished Lecture: "The Asian Crisis: Lessons for the Future"
Joseph Yam, Chief Executive, Hong Kong Monetary Authority
- I am delighted to welcome all of you to this fifth HKMA
Distinguished Lecture, and to introduce our speaker, Dr Stanley
Fischer, and our discussant, Dr Stephen Grenville.
- The title of Stanley Fischer's lecture is "The Asian Crisis:
Lessons for the Future." In a few weeks' time we shall be marking
the fifth anniversary of the outbreak of the Asian financial crisis
- a day or so, incidentally, after we celebrate an entirely
unconnected event, the fifth anniversary of the establishment of
the Hong Kong SAR. Asia and the world have gone through many other
ordeals since 1997, so that the crisis perhaps seems much further
in the past than it really is. But its effects - both physical and
psychological - are still with us. It is important that we continue
to study the causes and effects and to see what lessons there are
for the present. I have spoken at length on many previous occasions
on the Asian financial crisis, and I intend today to sit back and
listen. Let me, however, make three very brief observations.
- The first is
that, five years on, very limited progress has been made in
resolving one of the fundamental problems that helped make the
crisis so devastating for so many economies: a deficient global
financial architecture, which has been outgrown by the markets that
use it. There have indeed been some reforms both internationally
and in individual economies, and there is a much greater alertness
to the threats to stability posed by volatile, high-velocity
international capital flows. But much still remains to be done, and
as capital flows get bigger, the risk of further crisis remains.
Paradoxically, the risks are increased by a false sense of security
brought on by two or three years' absence of the kind of contagion
that shook so many parts of the world in the nineties.
- The second
observation is that, in the absence of international solutions, a
number of economies in the region have adopted local approaches to
the problem. Some have chosen to go slow or even step back from
financial liberalisation through introducing or tightening
restrictions and controls. While understandable - and in some cases
effective as short-term measures - such an approach is regrettable
because it shuts off many of the benefits, as well as the dangers,
of globalisation. In Hong Kong, where controls of this kind are not
practical because of the realisation that global links supply our
lifeblood, we have taken a different approach. We have chosen to
enhance policy credibility through greater transparency and through
strengthening and tightening up our rule-based monetary
system.
- My third
observation is that those who said that the Asian crisis was the
death knell of Asia as an economic force - and there were many of
them - seem to have been wrong. There has been remarkable
resilience, even in the worst-hit economies, and a will to reform
and restructure that has helped put a number of economies back on
their feet even during a time of global economic downturn. Progress
has not been evenly spread throughout the region, and there are
still causes for anxiety. But, as the world economy shows signs of
recovery, the prospects for the region, if not dazzling, look
somewhat brighter.
- It is now my great pleasure to introduce our speaker and
discussant. From the late eighties until very recently, Stan
Fischer has been very much at the centre of world economic and
financial crisis - and its solutions - first at the World Bank and
then as First Deputy Managing Director and subsequently Senior
Adviser at the IMF. He has played a practical role - often a
crucial one - in addressing, preventing and resolving crises, and
he has written extensively on the subject. Asia, no less than other
regions of the world, has benefited from his expertise, and we are
very honoured to have him here to talk about the lessons that can
be learned from the recent crisis.
- Steve Grenville served for 20 years with the Reserve Bank of
Australia, and was Deputy Governor of that Bank from 1996 to 2001.
Before joining the Reserve Bank, he served in the OECD in Paris,
and before that he spent time with the IMF in Indonesia. He played
a pivotal role during the Asian crisis, and was instrumental in
Australia's involvement in three of the larger support packages in
the region. It is a great honour to have him here as discussant
today.
- Stan and Steve are old friends of mine. I therefore think it is
right for me to comment on the positions in which they now find
themselves after careers totalling around 40 years in central
banking, and to try to see if this sheds any light on the eternal
question: "What happens to central bankers when they cease to be
central bankers?" I speak from a position of intense personal
interest because the recent resignation of Don Brash of the
Governorship of the Reserve Bank of New Zealand leaves me - so I am
told - with the doubtful distinction of being the longest-serving
central bank chief in the region. Don Brash, who has a reputation
for making original career choices, has reportedly gone into
politics - a precedent which, let me stress, I have no intention of
following.
- Stan and Steve have followed what the IMF would no doubt refer
to as a "two-corner solution". Since leaving the IMF earlier this
year, Stan has firmly anchored himself to one of the world's
largest banking and finance groups as its Vice-Chairman. I will not
name the bank here, because the HKMA is currently a tenant in a
building that bears its name. To avoid giving the impression that
the HKMA is a subsidiary of that bank, we have always tried to
pretend that the building is called something else, by refraining
from mentioning the name on our stationery, or to deliverymen or
taxi-drivers, or to anyone else. It is sufficient to say that the
bank in question is this year celebrating its 100th
anniversary in Hong Kong.
- Steve has gone to the opposite end of the two-corner solution
by entering the floating world of academics and consultants. Since
leaving the Reserve Bank of Australia six months ago, he has taken
up an appointment as Adjunct Professor at the National Centre for
Development Studies at the Australian National University. He also
works as an economic consultant, mainly, I understand, on
Asia-related topics.
- Whatever corner Stan and Steve have chosen, the important thing
is that they will continue to give their expertise to the region
through organisations which, though very different, have an
important presence in Asia. They are also here to share that
expertise with us today. So without further delay, let me welcome
them both and call first upon our speaker, Dr Stanley Fischer, to
deliver the Fifth HKMA Distinguished Lecture. Dr Fischer,
please.
