More generally, the sound  3  BIS Review 48/1999  position of our financial system as we exit the crisis is virtually unique in the region, and will be a key pillar in ensuring a return to sustained growth. A number of continuing issues, and new ones on the horizon, will provide the HKMA with a heavy workload in the remainder of this year. These include: •  The possibility of further attacks on the currency, despite the improved stability in local and world markets: we need to be constantly on our guard for signs of trouble. •  Further work to improve the currency board system, with the help of the EFAC Sub-Committee on Currency Board Operations: much progress has been made in the past nine months or so, but this is an on-going process, and a number of ideas for refining the system are in the pipeline. •  The rest of this year will continue to be somewhat difficult for the banking sector - but it remains as a whole in excellent shape to cope with the pressures ahead. •  One of these pressures is the Year 2000 problem. As this Panel heard a few weeks ago, Hong Kong’s banks are internationally recognised as being among the best prepared in the region, if not the world, and work continues on contingency planning and other issues. This has been, and will continue to be in the months ahead, a priority task in the HKMA’s supervisory programme.
Rather, as JFK once said, “the time to repair the roof is when the sun is shining”. By setting the CCyB rate above zero now, we lock in existing excess capital at a time it is relatively cheap (in good times, retain earnings is the main driver of capital increase and the impact of a higher capital requirement on credit and the economy at large is limited is the current circumstances) to be able to absorb futures losses and loosen the regulatory requirement at a time capital is scarcer and the macroeconomic impact of a gap would be significant. 3/4  BIS central bankers' speeches  A number of European countries have taken similar steps to increase their room for manoeuver ahead of a possible future storm. In that context, macroprudential policy is often described as a complement to monetary policy: a policy necessary to remedy the financial stability consequences of very accommodative monetary policy. I would have a more encompassing perspective: macroprudential policy is a complement to monetary policy both today and in the future: by contributing addressing financial buoyancy, it enables monetary policy to be relatively more accommodative today – but the preventive reach of macroprudential policy should not be overestimated, especially while macroprudential authorities are still relatively young and the policy toolkit less sophisticated than that of other policies; more significantly, by building up (macro)prudential room for manoeuvre ahead of the next storm, it also helps restoring monetary room for manoeuvre to address adverse developments.