The third Hong Kong Monetary Authority (HKMA) Distinguished
Lecture took place today (Thursday). The Keynote Speaker was Mr
Jean-Claude Trichet, Governor of the Banque de France. Dr Donald
Brash, Governor of the Reserve Bank of New Zealand, was the
Discussant.
Speaking on the subject "Risks and Challenges of the
International Financial Scene," Mr Trichet offered his perspective
on the reform of the international financial architecture. He also
stressed the contributions of the European Monetary Union towards
monetary and financial stability.
Mr Trichet identified five key measures for strengthening the
financial systems of emerging economies against external shocks.
These include the adoption of the Basle Core Principles for
Effective Banking Supervision; deposit insurance schemes; policies
to encourage foreign direct investment; adoption of
"liquidity-at-risk" policy; and policies to discourage excessive
short-term foreign borrowing.
On the promotion of efficient functioning of global markets, Mr
Trichet said that full and reliable transparency for all, including
both public and private sector entities, would be the most
effective measure for countering dangers arising from the "herd
instinct" of market participants. Mr Trichet emphasised the
importance of designing and implementating internationally agreed
standards for ensuring effective transparency at the international
level and urged that ways should be found to involve the private
sector more effectively in crisis resolution.
Mr Trichet said that the success of the euro would encourage a
balanced international monetary system. Mr Trichet emphasised that
the euro was built upon the legacy of the best European currencies
and that the policy pursued by the European Central Bank was one of
price stability and currency solidity in a steady medium and
long-term perspective. The euro thus had a clear potential for a
stronger external value.
Dr Brash echoed Mr Trichet's views on reforming the
international financial architecture reform. He also considered
that the most productive focus for international and national
economic reforms lay in the four key areas of strengthening
financial markets, reducing vulnerability to short term capital
flows, promoting greater transparency at all levels, and involving
private creditors in debt resolution arrangements. Dr Brash said
that modern economies were inherently complex and there was no "one
size fits all" approach or magic solution to the reform of the
international financial architecture.
In his opening remarks, Mr Joseph Yam, Chief Executive of the
Hong Kong Monetary Authority said: "The crises over the past two
years have taught us that, no matter how well maintained the
domestic financial environment may be, serious problems persist in
what has proved to be an increasingly volatile international
financial system. These problems cannot be resolved by individual
economies on their own. Regional and international co-operation is
clearly necessary for reforming the existing international
financial architecture, which has failed to keep pace with the
globalisation of financial markets and with technological
innovation."
The HKMA Distinguished Lecture was first launched in December
1996. The aim of the HKMA Distinguished Lecture is to provide a
forum for the local financial community to hear and exchange views
with influential figures from the international financial
community. Today's event was attended by over 500 participants.
Hong Kong Monetary Authority
8 July 1999
