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.
At the heart of such thinking must be the view that the banking system exists to provide financial intermediation in support of the larger economy: it cannot be some abstracted, disembodied realm of activity in which intermediaries compete with each other to dream up ever more complicated ways of making a fast profit. But such thinking should not rule out innovation, as long as the objectives are clear: and the main objectives should be to serve activities in the greater economy, to increase the efficiency of the financial system without sacrificing its safety. This leads to my fourth and final observation. We have many examples of such innovation in Hong Kong to draw upon, but there is one that is particularly appropriate on this evening of reminiscences. I refer to the introduction of renminbi business into banks in Hong Kong – a development which seemed revolutionary at the time, but which now seems a very normal activity. It had small beginnings and is a gradual, cautious process: there is, of course, scope for much further growth and development. This innovation has clear practical uses in facilitating economic relations between Hong Kong and the Mainland, in reinforcing Hong Kong's role as an international financial centre, and in supporting the liberalisation of China's financial system. How many of us here, I wonder, recall that the idea of developing renminbi business in Hong Kong was first broached in 2001, during one of the Annual HKAB visits to the Mainland which I had the privilege of joining?