This came against the background of quite volatile movements in the global currency markets, which included, most notably, a sustained weakening of the US dollar against other currencies. At the risk of stating the obvious, an orderly depreciation of the US against other currencies is in Hong Kong's interests because it means that, because Hong Kong's currency is linked to the US dollar, Hong Kong also becomes more competitive. This larger point may have been overlooked in all of the fuss about the somewhat less significant strengthening of the Hong Kong dollar against the US dollar. With regard to the Mainland's currency, the political pressures from outside for an appreciation of the renminbi exchange rate have been prompted by the considerable attention that is being given in the US to the bilateral trade imbalance between the Mainland and the United States. The arguments for appreciation are that, from the US perspective, Chinese exports are undervalued and therefore unfairly competitive, and, from the Chinese perspective, the substantial capital inflow into the Mainland might carry long-term risks. Leaving aside the arguments about trade, let us look a little more closely at the question of capital inflow and how to manage it. First, to put things in perspective, it should be noted that the Mainland's current account surplus is really very small by international standards perhaps something around one per cent of GDP in the first half of 2003. This is much lower than the corresponding figures for many other economies.
Therefore, perception mismatch among frontline staff about what really represents “good customer outcome” is something that banks must be careful to avoid. 8. Another interesting observation from the exercise is about perception of performance gauges. An area that banks have been putting a lot of emphasis in the past few years is reducing the weight of financial performance in incentive systems. Nevertheless, our review found that the perception of incentive structure differs greatly among different staff levels. More simply put, while senior management and supervisors think that the incentive systems are more balanced among business targets and non-financial factors such as compliance and customer outcomes, frontline staff generally still take financial  performance and business targets as the highest assessment priority. This possibly reflects that some other forces maybe at work, such as social interaction and recognition among bank staff. 9. The HKMA published the final report of this review last month. We highlighted in the report the above observations and a number of other interesting points which, I think, is definitely worth a read. In the report, we also put forward incentive system design principles and useful practices identified from the review. We are in the meantime collating the observations on individual participating banks, and will communicate the useful findings to them individually. I truly hope that banks will make good use of the review outcome to assist in their ongoing risk culture journey. Mandatory Reference Checking Scheme 10.