David Carse: Recreating the financial services industry for the new economy: a regulator’s perspective  Keynote speech by David Carse, Deputy Chief Executive of the Hong Kong Monetary Authority, at the Asian Banker Summit 2000 in Hong Kong on 24 October 2000. *  *  *  Ladies and gentlemen, I am pleased to be here as a keynote speaker for this major conference organised by Asian Banker Journal. One of the themes of the conference is how the banking industry is trying to get to grips with the challenges posed by the New Economy. I will be giving the regulator’s perspective on these important issues. As a banking regulator, I suppose that I am something of an Old Economy dinosaur. And it is a bit daunting to be sharing the platform with two other speakers who are obviously more expert in the New Economy than I am. One of these is Mr Jeffrey Koo Jr whom I saw described in a recent magazine article as a “30-something Net-head”. I’m not sure exactly what that means, but I think that it was intended to be complimentary. Unfortunately, some of the gloss has been taken off the New Economy in recent months. The dot.com fever in the stock market seems to be well and truly over, and has joined the long list of speculative crazes that have faded into history.
Recent Developments: Status of Consultations and the October Press Release In that vein, I’d like to discuss the status of our discussions and especially the proposals for managing credit risk. By now you’ve no doubt read that the Basel Committee agreed two weeks ago on a breakthrough plan to address the final issues raised in public consultations and to complete the new rules. This was a difficult task, as the Committee received over 200 comment letters from the industry and the broader public on the Third Consultative Paper, or “CP3”. While we might have been somewhat surprised by the number of responses that we received, we were not surprised by the hard work that was evident in the letters. In addition, we will have further valuable information from national consultative processes such as that under way in the United States. The comment letters were positive and offered constructive suggestions on a wide range of issues. Indeed, even among the most critical of respondents, one finds support for the introduction of the “three pillars” of the New Accord and its aim to align capital more closely to risk; for the development of greater consistency in the supervisory review of capital adequacy; and for strengthening the effectiveness of market discipline through enhanced transparency. It was, moreover, satisfying for us that most commentators acknowledged substantial improvements in the proposals since the release of the second consultative paper in early 2001.