The task, for Hong Kong as for all jurisdictions, will be to translate high-level principles and universal standards into local practice, and to develop the skills to carry them out. This is an enormous challenge, but there are reasons for confidence in Hong Kong's case. We have had a largely positive experience in introducing Basel II into our supervisory system, thanks in no small part to the hard work of both HKAB and HKIB. Regulatory reform is driven not just by objective circumstances but also by changing public expectations. This brings me to my third observation: that banks and financial institutions (and, it might be added, regulators) are now operating in a more sceptical, more demanding, even hostile environment. We see this around the world, and, particularly in the aftermath of the Lehman Brothers collapse, we have seen it in Hong Kong. There is also discontent and anxiety locally that pre-dates the crisis – for example, about access to banking services, about the risks of new technology – that result partly from the changing business landscape and partly from changing expectations. We must expect this trend to continue, and it will be necessary for the banking industry and the regulator to take more and more account of wider public opinion, and to tackle areas of concern.
No doubt the details will take some time to work out. We might be tempted in Hong Kong to respond that we have demonstrated clearly this last year that we already have the ability to maintain banking stability. The measures being contemplated internationally are designed for repairing and renovating banking systems that have effectively collapsed: some of the measures may indeed be going too far. Therefore, we might conclude that we do not need to consider them for Hong Kong. Such an attitude would, I think, be a mistake. As an international financial centre, Hong Kong must adopt international standards and best practices. We have to move with the times, although that does not of course mean we have to blindly implement everything in an inflexible, straightjacket manner. Hong Kong is, in fact, in a good position to adopt and participate in the various measures now under consideration by the G20, the Financial Stability Board and its Standing Committees, and other international agencies. Our voice may not be so loud or strong as that of the larger economies, but we still have a responsibility to speak up, to seek to ensure that what comes out of the international forums is balanced, and realistic for local and regional conditions. The increasing participation by Asian economies, including Hong Kong, in these international forums is a good sign that the rest of the world is paying attention to, and ready to learn from, the experiences of this region.