Joseph Yam: Financial integration and regulation Remarks by Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, at the conference: The Euro: Lessons for European and Asian Financial Markets, Hong Kong, 24 February 2006. *  *  *  Ladies and Gentlemen, 1. It is a great pleasure for me to open the proceedings of this conference on “The Euro: Lessons for European and Asian Financial Markets”. It is also an honour for the Hong Kong Monetary Authority to be co-sponsoring this event with the European Commission. The programme is a very rich one and it will be impossible for me, in these opening remarks, to cover all the topics to be discussed later this morning and in the afternoon. I do notice, however, that the words “financial integration and regulation” appear in several of the session titles. These are topics close to my heart, because I have come to believe that they can influence profoundly how Asian economies develop in the years ahead. Well managed financial integration, combined with sound regulatory practices, can help the region maximise its economic growth potential while maintaining financial stability. I have chosen therefore to focus on these topics. 2. I will try and lay out a case for closer financial integration in Asia, both as a means of achieving more efficient allocation of resources in the region, thereby contributing to continued economic growth, and as a means of supporting financial stability.
As a major interface between Europe and the rest of the world I have little doubt that euro-activity in London will mean more rather than less euro activity in other European financial centres like Frankfurt, Paris, Milan, Amsterdam or Copenhagen. And I have little doubt either that what is good for those centres will be good too for the City. Thirdly, and perhaps most fundamentally, the United Kingdom, even while it does not participate in the euro, can contribute to its success by continuing to pursue macro-economic, both fiscal and monetary, discipline in parallel with the euro-area countries. The Government is committed to this course as a matter of national economic self-interest - one of its very first acts in Government for example was to hand operational independence for the conduct of monetary policy to the Bank of England. But these same policies are calculated, too, to make us a more prosperous and active trading partner for Europe as a whole, and to ensure that we do not have any avoidable disruptive effect on the policies or on the economy of the euro participants. More than this they are calculated to foster sustainable economic convergence as the necessary precursor to our eventual adherence to the euro club. And in the meantime the British Government will continue to pursue, and to advocate in the councils of Europe the supply-side flexibility that will be vital to its success.