I would like to take this opportunity to thank everyone in our banking community for maintaining services to your customers during these extraordinary times. The speed and agility you have demonstrated in delivering the relief measures has been particularly impressive. The resilience and resourcefulness of our banking sector put us in a strong position to handle the challenges that lie ahead. 5. Despite the ongoing geopolitical tensions, I have no doubt that Hong Kong will continue to perform its special role as an international financial centre. China remains the engine of global economic growth and the biggest provider of savings. The Mainland’s opening of its financial sector continues to offer new opportunities for the rest of the world, and Hong Kong is at the nexus of it all. While our banks must continue to stay resilient against the many challenges of our times, they also need to prepare themselves for new opportunities emerging from the transformations now unfolding in our region. 6. In today’s conference we are invited to look beyond our present difficulties, to envision a ‘Brave New World of Banking’ in an age of ‘Innovation and Transformation’. I congratulate HKIB on choosing such a forward-looking topic – one to which I have also been giving a great deal of thought. Taking up this theme, I will discuss three big transformations that are already happening, and talk about how the industry and how we at the HKMA are responding to them.
For legitimacy and effectiveness of measures and also for better global governance, emerging economies should involve in decision-making process and be part of the solution. However, emerging countries should also be aware of the fact that more power in decisionmaking process comes with more responsibilities. Both developed countries and emerging market countries share the blame in global economic imbalances that worsened the magnitude of current crisis. In theory, the adjustment of imbalances should have taken place through either exchange rates or interest rates or both. Mainly developed countries prevented that adjustment on the interest rates, whereas emerging market countries joined their counterparts by preventing adjustment on the exchange rates. Today, many people debate the need for a new global reserve currency, creation of an international clearing system, enhancing the role of central banks, and establishment of a supranational body to safeguard global economic and financial system. These discussions are necessary and maybe overdue. A global reserve currency might be needed to alleviate the tension between appropriate monetary policy of the reserve currency country and that of the global economy. Creating an international clearing agency between trade partner countries may be useful to reduce the need for accumulating foreign exchange reserves. A supra-national body may be the only solution for the externality problem in the Bretton Woods system and its successor, so called, the Bretton Woods II. Main responsibilities of central banks may be enhanced to the stability of asset prices as well as prices of goods and services.