Before recommending the establishment of the Federal Reserve System - a plan which it described as “essentially an American system, scientific in its methods, and democratic in its control” - the Commission produced 22 volumes on the monetary and banking systems elsewhere, especially in Europe. Copies of these volumes sit proudly in the Governor’s anteroom in the Bank of England. The authors noted that “the important place which the Bank of England holds in the financial world is due to the wisdom of the men who have controlled its operations and not to any legislative enactments”. But they did not see the Bank of England as a model, and they recommended the creation of an institution framed by legislation. It would be ninety years before Britain finally learnt the lessons of the National Monetary Commission and passed legislation to buttress whatever wisdom the Bank could command. Institutions embody accumulated wisdom and experience, and they should not be meddled with lightly. From time to time, however, it is necessary to rethink the role of our institutions. The changes made to the Bank of England in recent years, including an inflation target and a high degree of transparency, have, I believe, improved Britain’s monetary arrangements. Whether either the men and women or the current institutional arrangements of the Bank of England will have any more success in influencing monetary arrangements in the United States today than in 1908 is a matter I leave to you.
BIS Review 146/2008  3  To name just a few developments in the past 12 months: a new Dow Jones Islamic Market Index was launched to track China-related equities listed on the Hong Kong Stock Exchange; Islamic mutual funds were introduced by a local bank and an asset management company featuring China-related equity investments through the stock market platform in Hong Kong; and an exchangeable sukuk linked to the shares of a Mainland company listed in Hong Kong was issued in March, enabling investors to gain exposure to China’s growth story. The response so far has been highly encouraging: for example, the sukuk was 10 times oversubscribed. Likewise, positive progress is achieved in the development of Islamic banking in Hong Kong. Following the first Islamic banking window introduced three months ago, I’m glad to witness yet another market player who is set to launch its Islamic banking window in Hong Kong at this auspicious occasion today. The increasing number of banks taking part in Islamic banking activities will add further momentum to the development of an Islamic capital market in Hong Kong by providing an important tool for funding and liquidity management. The Hong Kong Monetary Authority will continue to give full support to the HKSAR government in its initiative to develop Islamic finance in Hong Kong by acting as a market enabler and infrastructure provider. The HKMA has taken important steps and devoted considerable resources to promote the industry in Hong Kong.