For the HKMA, contacts with other central banking institutions are quite frequent and mostly a matter of routine, albeit important routine, even though some observers may be tempted to think otherwise.
Among the steady stream of overseas visitors to the HKMA is the occasional raw analyst from a foreign financial institution, rather ill informed about Hong Kong but eager to learn and definitely eager to find something original or sensational to report back to his boss. Here is a tongue-in-cheek reconstruction of a typical interview, including my guess at what is really going on in his or her mind.
"Tell me - if, er, it's not too sensitive an issue - what are the HKMA's relations with the People's Bank of China?"
I reply: "We go there; they come here; we meet at international gatherings; we speak often on the phone. I would describe our ties as very close indeed ....."
A stunned silence. My goodness! He's admitting it. Close and frequent contact. Do other people know about this? Just wait till I get home and tell the boss what I've discovered. It's not "one country two systems" after all; there's no monetary autonomy; it's all controlled from Beijing.
"..... as indeed are our ties with the Bank of England ....."
He looks startled. How can this be? Still conniving with the old colonial power? What an extraordinary revelation! I wonder if they admit that to the People's Bank?
"..... not to mention the Federal Reserve in the US ....."
Heavens! This is all too much. But wait a minute. Aha! It must mean they're negotiating about imminent dollarisation. Head Office is really going to be impressed that I've dug out this admission.
"..... and the European Central Bank ....."
Oh no. Perhaps I jumped to the wrong conclusion. Maybe it's not dollarisation, but what they're really doing is preparing to replicate the euro in Asia.
"..... and the Reserve Bank of New Zealand....."
Goodness, now I certainly am getting confused. Isn't it New Zealand which bases monetary policy on inflation targeting? Perhaps that's where Hong Kong's heading.
"..... and the Monetary Authority of Singapore."
I don't believe it! Consorting with the competition. Stupid or what?
And so it goes on.
For the record, we do indeed have close contact with the People's Bank. There are many matters of common interest to discuss, such as the supervision of branches or subsidiaries of banks operating in each other's territory; improving mechanisms to execute payments or collect cheques across the border; development of financial markets; opportunities for Hong Kong arising from China's admission to the WTO; macroeconomic implications of the global slowdown; representation of Hong Kong's interests in international forums where the sovereign power alone has a formal voice; and so on.
But there is absolutely no encroachment on Hong Kong's autonomy in conducting its own monetary and financial policies.
As for our contacts with other central banks, these are extensive and in many cases, as with the People's Bank, regular and frequent too. There is a long-standing and continuous process of networking between central banks around the world, both bilaterally (we maintain particularly close contact with a number of other central banks in the region) and in multilateral forums such as the Bank for International Settlements. It is invaluable to be part of that network, to participate in discussions on both central banking policy and technical matters, to receive and offer advice, and to know that we have ready access to one another in times of need.
The contact with other central banks is thus very much part of our routine, and rarely a signal of extraordinary happenings. I'm sorry to disappoint those who might wish it were otherwise or leap to erroneous conclusions when they glimpse a senior central bank visitor heading into our offices.
Tony Latter
Deputy Chief Executive
8 November 2001
More information on the HKMA's External Relations can be found here.
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