Hong Kong Monetary Authority

The launch of the final phase of Hong Kong's US dollar payment system early next week will offer paper cheque clearing and delivery versus payment settlement of debt securities denominated in US dollars in Hong Kong, Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority (HKMA), said in a luncheon address to the Seventh Annual Hong Kong General Chamber of Commerce Business Summit today (13 December).

The US dollar payment system will significantly lower costs and reduce settlement risks for businesses throughout the region. The system is part of the HKMA's continuing programme of building financial infrastructure under its strategy for developing Hong Kong as the financial hub of Asia, said Mr Yam in his address entitled "Open and Connected: Scaling New Heights".

According to Mr Yam, Hong Kong sees important opportunities in the three world trends of trade liberalisation, globalisation and technological advance in its development into a logistics, financial and digital hub. He said that trade liberalisation, which was most dramatically illustrated by China's prospective entry into the World Trade Organisation (WTO), would continue to bring enormous opportunities for Hong Kong to further enlarge and deepen its intermediary role - especially in financial, technical and professional services - between Chinese enterprises and overseas investors.

"These trends have been in play for a long time," said Mr Yam. "But there are clear signs that these mediatory and advisory services are now receiving a boost in anticipation of WTO entry, as companies in the Mainland, in Hong Kong and overseas position themselves for new kinds of commercial relationships."

On the issue of globalisation, Mr Yam said Hong Kong was well positioned to take advantage of this trend by virtue of its long tradition as a free and open market. He said that globalisation also brought challenges, and the most difficult of these were in financial markets, where problems from outside could rapidly escalate into crises that threatened the integrity of an entire system. Even in large economies with deep markets, government intervention in one form or another had been necessary to handle such challenges, Mr Yam said.

"For small and open economies, such as our own, the challenge is even harder to meet, and the measures necessary to prevent market failures have been even more dramatic," Mr Yam said, citing the operation in the stock market in August 1998 as an example. "Looking ahead, to minimise the need for government intervention aimed at heading off market failures induced by large and volatile capital flows, we need to build bigger markets and to strengthen the markets we already have."

Mr Yam said the more significant developments in the international efforts to deal with this issue included codes of practice and the promotion of transparency. There was also increasing focus on building effective infrastructure, he said.

Mr Yam noted that the question of exchange rate systems was a crucial element in the management of international capital flows. The linked exchange rate system, he observed, in combination with sound fundamentals and well managed banks, had helped Hong Kong through the recent crisis and had propelled improvements in productivity.

"Because the exchange rate link suits an externally oriented, entrepot economy, it will continue to serve Hong Kong well in its expanding role as a regional and international hub, as China enters the WTO. And this applies, it should be added, regardless of the path taken by the renminbi," said Mr Yam.

On technological advance, Mr Yam said recent advances in information technology had played an enormous role in determining the speed and manner in which money circulates and the nature of the competitive landscape in the field of financial services. But these developments had also brought dangers and anxieties, he added.

"In the field of regulation and supervision, we need to ensure that we keep pace with the rapid development going on, so that anxieties about e-money and e-banking - real or imagined - are properly addressed," said Mr Yam.

Concluding his speech, Mr Yam said that all these processes would bring opportunities as well as risks and uncertainties. But as one of the world's most open and connected of cities, Hong Kong was well placed to respond to these challenges and to deepen further its role as a global city.

For further enquiries, please contact:

Caitlin Wong, Manager (Press), at 2878 1687 or

Thomas Chan, Senior Manager (Press), at 2878 1480

Hong Kong Monetary Authority
13 December 2000

© Copyright 1996-2006 irasia.com Ltd. All rights reserved. Tel: (852) 2831-9792.

DISCLAIMER: irasia.com Ltd makes no guarantee as to the accuracy or completeness of any information provided on this website. Under no circumstances shall irasia.com Ltd be liable for damages resulting from the use of the information provided on this website. TRADEMARK & COPYRIGHT: All intellectual property rights subsisting in the contents of this website belong to irasia.com Ltd or have been lawfully licensed to irasia.com Ltd for use on this website. All rights under applicable laws are hereby reserved. Reproduction of this website in whole or in part without the express written permission of irasia.com Ltd is strictly prohibited. TERMS OF USE: Please read the Terms of Use governing the use of our website.