In terms of actual measures – something that Antony also wants me to talk about – I would refer you to the eighty recommendations in the Report of the Focus Group on Financial Services published in January 2007 as Hong Kong's response to the Eleventh FiveYear Plan of the country published in 2006 and as Hong Kong's input to the National Finance Working Meeting in 2007. As you may be aware, the implementation of our overall strategy and many of the detailed recommendations involve the relaxation of controls in the financial systems on the Mainland. While the benefits of financial liberalisation are clear, so are the risks to financial stability, as the Asian financial crisis of 1997-98 and the current turmoil in the developed financial markets demonstrate so vividly. Here there should be a strong emphasis, to quote the Premier again, on gradualism, controllability and the ability to take initiatives at the right time. And in the context of pursuing the complementary, mutually-assisting and interactive relationship between the two financial systems, financial liberalisation should not be seen as helping Hong Kong. We welcome support from the Mainland in discharging our legal responsibility in maintaining the status of Hong Kong as an international financial centre, but I hope I have convinced you that in developing our strategy and our recommendations, we very much have the national interest foremost in our minds.
London, of course, has much of the European economy in addition to the United Kingdom economy. Hong Kong has the Mainland of China, the third largest trading partner, the fourth largest economy, the largest foreign reserve holder and home to participants in the key financial markets that collectively form the largest player in the world. The second point I wish to make is that, under "One Country, Two Systems", there are two financial systems in China, both in a position to serve the interests of the country in the allimportant function of financial intermediation. This is unique and there are no relevant precedents in the financial history of the world. Because of the uniqueness of this arrangement, there is understandably considerable scepticism both internationally and within China on how it might work. Let me tell you. The two financial systems are different in a variety of ways, with the financial system on the Mainland operating in the developing environment of a socialist market economy and the one in Hong Kong operating in the familiar environment of a capitalist free market economy. We all know that where there are  BIS Review 58/2008  1  differences, there are opportunities for exploiting relative strengths, addressing relative weaknesses and maximising synergies between the two systems, remembering always the national interest of making financial intermediation more efficient for the country as a whole. In other words, there is a need to develop a complementary, mutually-assisting and interactive relationship between the two financial systems.