In any case, the need for a physical presence with a large branch network in the provision of financial services may soon become a thing of the past with the advancement of telecommunications and information technology. It is still early, I think, to come to a definitive view, but the prospects are that electronic money and the use of the internet for banking and other financial services are breaking down geographical boundaries. Barriers to entry and restrictive practices may lead to the diversion of business to offshore markets in locations with liberal practices. 7. The second area concerns financial intermediation in the international dimension, involving the flow of savings into investments across international boundaries. Hong Kong as a financial services centre has a business role of providing the markets, in banking, debt and equity, supported by other efficient financial services and the rule of law, to facilitate the international flow of funds in this region. Our markets have the freedom, the liquidity and the integrity to attract international investors managing institutional savings to come here and those in need of funds to raise them here. The opportunities in this region, in particular in China, are enormous, and international investors would have a preference to operate in markets in which the rules of the game are transparent and familiar to them, and are of internationally accepted standards. And that means coming to Hong Kong. 8.
In such market we indeed observe the emergence of monopolistic situations and systemic risk is associated to the possibility of the default of such market infrastructures. We should therefore make sure that we –all collectively- are shielded from a too strong market concentration in terms of clearing, which create risks that can’t be addressed by cooperation among their supervisors and overseers. Conflicting interests may indeed arise between (i) the authorities in charge of the oversight of the CCP, and its financial resilience, and (ii) the authorities in charge of the financial stability of the offshore markets served, especially in times of crisis, as we have seen in Europe during the sovereign debt crisis. To prevent such situation levers to be used include in my view a location policy of clearing activities and direct oversight by authorities in charge with the financial stability of the markets served. 3/3  BIS central bankers' speeches