Before I respond to these claims, let me make three points very clear. The first is that I have no objection to an open and informed public debate on the merits and disadvantages of the Link - and on possible alternative exchange rate systems. It is absolutely right that a policy that forms the keystone of our financial system should be open to scrutiny. The strong public and market confidence in our currency can only be sustained if the reasons for adopting the monetary policy we choose are properly understood, and if the limitations, and the merits and demerits of possible alternatives, are examined through informed and reasoned debate. We encourage this process in the various publications we put out, in our educational programmes, and through the presentations and discussions that my colleagues and I take part in with people from all walks of life. Secondly, the benefits and disadvantages of the Link - its effects on the economy, the experience of similar systems elsewhere, the possible alternatives - are, and always have been, subject to continuous and critical review. This process has been considerably strengthened in recent years with the creation of a dedicated research department within the HKMA, the establishment of the Currency Board Sub-Committee, and the opening of the Hong Kong Institute of Monetary Research. A very large part of the output of these institutions is made public, so that the range and depth of the research they carry out is available to anyone who is interested.
Others present considerable uncertainty: for example, the extent and duration of the collapse in business and consumer confidence, and the question of how far monetary and fiscal stimulus will contain the collapse; and the scope and economic effects of the war against terrorism, which, we have been told, will be long and unlike any other war. The effects on our regional economy are likely to be severe. We are heavily dependent on exports to the USA, at a time when these are declining and likely to continue to decline for some time to come. Capital inflows into the region are falling because of increased risk aversion. Within the region, many countries face persistent internal problems, in some cases - such as Indonesia - both economic and political. The big engine of the region - Japan - continues to falter, with declining exports, rising unemployment, a weak banking sector, and an economy officially teetering on the brink of yet another recession. The latest news from Singapore - in many senses our sister-city in the region - is not good at all. The bright spot in the region continues to be China, which has sustained real GDP growth of 7.6% and export growth of 7% for the first three quarters. It seems inevitable that exports, and in turn GDP, will be affected by the decline in consumer spending in the US, which accounts for around 20% of China's export market: the latest figures already suggest this.