As for Hong Kong, our main task is to maintain the various monetary and financial laws that have been put in place before July 1997. Of course, we need to review and improve the legal framework in the light of the developments in the financial markets. The formulation and amendment of monetary laws are proposed by the executive body of the HKSAR and passed by the legislature. (B) Mainland authorities do not interfere in the monetary affairs of the HKSAR. The monetary authorities of the Mainland and the HKSAR are mutually independent and one is not subordinate to the other. The monetary authority in the Mainland does not set up any office in Hong Kong to exercise monetary management. 12. Under the Exchange Fund Ordinance, the Chief Executive of the HKMA, i.e. the Monetary Authority, is accountable to the Financial Secretary of the HKSAR government. According to the Law of the People’s Bank of China, the PBOC is accountable to the State Council and the branches of the PBOC are accountable to the headquarters. As mentioned earlier, although Hong Kong has been subject to a severe ordeal during the financial turmoil, the PBOC and other Mainland government departments have not interfered in Hong Kong’s monetary affairs. Furthermore, our autonomy in the management of Hong Kong’s foreign reserves is an important element in the mutual independence between the two monetary authorities. 13. While maintaining a mutually independent relationship, the two monetary authorities will continue to maintain and strengthen further the existing sound co-operation between the two places.
A copious amount is being harbored by nondepository financial institutions, and another $ trillion is sitting in the cash coffers of nonfinancial businesses. 1  Gasoline prices were not a major factor in January’s headline index, at least relative to the normally wild swings we see in the price of gasoline. On a seasonally adjusted basis, gasoline prices increased 0.9 percent in January (not annualized) and contributed roughly 0.3 annualized percentage points to the headline rate. Based on weekly data collected by the Department of Energy, the price of gasoline in February is on pace for an increase of 6.3 percent over January. Given that the typical seasonal pattern has gasoline’s price falling 1.1 percent in February, we should see a roughly 7.4 percent seasonally adjusted increase when personal consumption expenditures (PCE) data for February come out at the end of March. Gasoline alone may end up contributing about 3 annualized percentage points to February’s headline PCE rate. A more thorough discussion can be found here: www.dallasfed.org/data/pce/2012/pce1201.cfm. 2  FOMC Greenbook forecast, December 1966. BIS central bankers’ speeches  1  Trillions of dollars are lying fallow, not being employed in the real economy. Yet financial market operators keep looking and hoping for more. Why? I think it may be because they have become hooked on the monetary morphine we provided when we performed massive reconstructive surgery, rescuing the economy from the Financial Panic of 2008–09, and then kept the medication in the financial bloodstream to ensure recovery.