We therefore recall the importance for those countries that still have not achieved a balanced budget position to honour their commitments to catch up with the other countries of the euro area by 2003/04. Let me now turn to some other issues raised in the draft resolution on the ECB’s Annual Report. We welcome the draft resolution’s clear support for the ECB’s monetary policy strategy. The draft resolution concludes that short-term movements in monetary aggregates should not be overemphasised and that there should not be any mechanical reaction to deviations of M3 growth from the reference value. This is fully in line with the ECB’s monetary policy strategy and practice. The first pillar of our strategy, which gives a prominent role to the analysis of monetary developments, is based on the empirical evidence of a close and stable relationship between money and prices in the euro area over the medium term. There is no evidence yet to suggest that this link has weakened over time. The ECB is fully aware that monetary developments may be subject to portfolio shifts in the short term, which are not directly related to future spending decisions. Indeed, what matters is to identify and understand the underlying reasons for monetary developments in order to assess the implications for the risks to price stability over the medium term. In this respect, the analysis of monetary developments has provided useful guidance to the ECB’s monetary policy also over the past year.
Benchmarking against the OECD principles and the practices of some advanced economies, the HKMA is of the view that Hong Kong has been doing quite well in protecting bank customers’ interests. We also strive to make changes and improvements from time to time. Yet, I believe there is a need and room for further improvements as to how banks deal with their customers. This is because bank customers are essentially entrusting most of their liquid assets or funds with banks that they trust. Trust between banks and their customers is beyond that between general service providers and their customers. Also, as compared to other financial institutions, it is indeed easier for banks to earn confidence and trust of their customers. In addition to bringing business opportunities and profit to banks, customers’ confidence and trust in banks are also the cornerstone for banking and financial stability. 4. Let me borrow a famous quote and put it simply that with “great trust” comes great responsibility. First, banks should ensure their prudential operation and risk management are in place to safeguard customer deposits. Second, banks should treat their customers fairly when providing various services and financial products to them, and should stand in customers’ shoes in pursuing profit. But how can we achieve this? In the past few months of discussion with the industry, we found that the basic principles of fair treatment to customers are indeed not so complicated. Mr Benjamin Hung, Chairman of the HKAB, will brief us on the five principles in the Charter. 5.