And I would like to offer some ideas of the regulatory challenges facing the banking industry in the years ahead – and how these relate to the wider economy and the community. Looking back 7. My first term as chief executive of the HKMA began 10 years ago this coming Tuesday. That was around two years after the US subprime mortgage crisis had broken out, in 2007. 8. Obviously, Hong Kong was affected. The local community was especially shocked by one side-effect of the Lehman Brothers bankruptcy – and that of course was the Lehman minibonds episode. In this whole climate of crisis, public trust in the financial services industry had fallen. It was a challenging time to step into the chief executive’s office. 9. I do not want to spoil a very enjoyable lunch – so I will not give you a long list of the measures and initiatives the HKMA has introduced over the last 10 years. At a rough estimate, we issued an average of around 70 circulars a year during this 10-year period. I am sure you all remember them very well! 10. For me, the most important work has been in addressing several broad themes, which to some degree overlap.
First, these institutions should not expect a return to “business as usual.” We are committed to implementing the reforms that will prevent a recurrence of the recent financial crisis. BIS Review 125/2009  7  Second, as most of the current reform agenda of the Financial Stability Board and the Basel Committee relates to the regulatory framework as applied by your home country, we expect that foreign banks’ operations in the United States will fully comply with these structures as they are put in place in their home country as well. Third, we support the continued international banking presence of global banking institutions. National implementation must not jeopardize the economic benefits derived from crossborder banking. We need to be wary about nationalistic approaches to supervision. Fourth, financial firms that operate in our markets should continue to be vigilant in meeting the expectations we have for strong risk management and compliance practices. It wasn’t too long ago that some foreign banking organizations faced supervisory discipline for failing to meet those standards. Given the lessons of the crisis, I would expect that our focus and attention on these areas would only intensify going forward. Fifth, we will be particularly focused on how the new supervisory framework will apply to the U.S. personnel associated with the operations of foreign banks in the United States. In particular, we will have substantial concern if these firms’ compensation practices are contrary to the text or spirit of the international agreements on compensation practices that are in the process of being hammered out.